Twitter shares set new high on ad growth potential

Five weeks after Twitter's IPO, the social media company's shares hit their highest point yet on optimism about ad spending trends.

THE SPARK: Mark Mahaney, an analyst at RBC Capital Markets, said that 59 percent of respondents in a survey of advertisers plan to increase ad spending on Twitter within the next year. Only 4 percent said they plan to decrease spending.

RBC and Ad Age magazine conducted the survey of 900 advertising professionals.

THE BACKGROUND: Twitter, which is based in San Francisco, has about 200 million users on its service, through which they can post 140-character messages. The San Francisco-based company makes the bulk of its money from advertising, and earlier this month it launched a new ad program that lets advertisers focus on a specific group of people and target ads at them.

ANALYSIS: The survey indicated that Twitter's ad platform is improving, Mahaney said in a note to clients Friday.

He nearly doubled his price target on Twitter's stock, to $60 from $33. Mahaney has an "Outperform" investment rating, equivalent to a "Buy" rating, on the stock.

SHARE ACTION: Up $2.52, or 4.6 percent, to $57.85 in midday trading Friday. Shares peaked earlier in the day at $58.20. The company's initial public offering priced its stock at $26.