What happened

Shares of social network Twitter (NYSE:TWTR) jumped as much as 11.3% on Monday (and is still up over 11% as of market close). The stock's rise follows two bullish notes from analysts.

J.P. Morgan analyst Doug Anmuth raised his price target for the stock from $20 to $27, calling it one of the firm's "top small and mid-cap ideas in 2018," according to Tech Trader Daily. In a similarly bullish note, Summit Redstone analyst Jonathan Kees initiated coverage of Twitter stock with a buy rating and a $26 price target.

A businessman using a smartphone

Image source: Getty Images.

So what

Both analysts cited stabilizing finances, product enhancements, and improved engagement among the reasons for their optimistic outlook on the stock.

In Twitter's most recent quarter, its year-over-year decline in revenue narrowed compared to the previous quarter, and its loss per share also improved. Monthly active users increased 4.1% year over year.

One of the most notable positive trends for the company has been its growth in daily active users. In Q3 this metric was up 14% year over year, for the fourth quarter in a row of double-digit growth.

Now what

For its fourth quarter, Twitter management provided a guidance range for its adjusted EBITDA in which the high end would make Twitter profitable on a GAAP (generally accepted accounting principles) basis.

In 2018, investors should look for Twitter to return to revenue growth and continue to improve in user growth.

Daniel Sparks has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Twitter. The Motley Fool has a disclosure policy.