Mizuho's TWTR Upgrade Brings Bulls to the Table

Twitter is expected to post earnings this Thursday, April 30

Twitter Inc (NYSE:TWTR) is getting a boost ahead of its first-quarter earnings report, due out before the open on Thursday, April 30, on an upgrade from Mizuho. The analyst lifted its rating on the social media giant to "neutral" from "underperform," adding that the impact of COVID-19 is already reflected in Twitter's stock price. At last check, TWTR is up 3.9% to trade at $29.83.

The upgrade is bringing some options bulls to the table. So far, 51,000 calls have exchanged hands, which is 1.72 times what's typically seen at this point, compared to just 13,000 puts. Most of this action is taking place at the weekly 5/1 series, with positions being opened at the 33-strike call. The 30- and 34-strike calls from the same series are also quite popular today.

While calls have outnumbered puts on an overall basis in recent weeks, there's been a much healthier appetite for these bearish bets than usual of late. This is per TWTR's 50-day put/call volume ratio of 0.36 at the International Securities Exchange (ISE), Cboe Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), which sits in the 87th percentile of its annual range.

Coming into today, the majority of analysts have approached TWTR with caution. A whopping 19 covering the equity gave it a tepid "hold," rating, while just four said "strong buy." This sentiment is echoed by the consensus 12-month price target of $29.52, which stands at a 2.5% discount to current levels.

Today's pop brings TWTR back above its 50-day moving average for the first time since early March. Since its March 18 low of $20, the security has seen a gradual climb higher, supported by its 20-day moving average and the round $26 level. For the month, TWTR is up 22.2% so far, though it's still off roughly 7% in 2020.

Looking back at TWTR's earnings history, the stock has seen some wild post-earnings swings during the past two years, including a 15.6% pop last April, and a 20.5% plummet in July 2018. During the past eight reports, Twitter enjoyed a positive next-day return half the time, and averaged a 13.6% move, regardless of direction. This time around, the options market is pricing in a move of 17.5%, following the company's first-quarter report.