SAN FRANCISCO - Shares of Twitter Inc (TWTR.N) surged nearly 11 per cent on Tuesday and were on track for their best session in two months after Morgan Stanley upgraded its recommendation on the social network to "equal-weight" from "underweight".

Investors are likely to continue to pay a premium for Twitter's stock due to expectations of faster revenue growth in 2018 and signs of progress in a company turnaround, Morgan Stanley analyst Brian Nowak wrote in a report.

Nowak raised his target price for Twitter by a dollar to US$29. Twitter traded at US$31.69 on the New York Stock Exchange at midday.

"Constructive advertiser conversations, improving user growth, and positive revisions make a more compelling risk/reward," Nowak wrote.

A surprise return to revenue growth sent Twitter's stock 12 per cent higher after its last quarterly report on Feb. 8 and it is up 32 per cent year to date.

The social network is popular with celebrities, professional athletes and politicians and is ubiquitous in the media, but it has struggled to turn a profit and consistently grow its revenue.

Overall, analysts are cautious. Nine recommend selling Twitter, 21 have neutral ratings and seven recommend buying, according to Thomson Reuters data. On average, they expect Twitter's stock to decline to $27.58.

The stock is trading at 45 times expected earnings, compared with Facebook's (FB.O) valuation of 21 times earnings, according to Thomson Reuters data.

Twitter is expected on average by analysts to post a 10 per cent increase in revenue to US$605 million and non-GAAP earnings per share of 12 cents when it reports its March-quarter results on April 25. Under GAAP, analysts on average expect a net loss of US$23 million.