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Buy Twilio Stock. It’s Well Positioned for Sustained Success, Says 5-Star Analyst

TipRanks
·2 min read

Twilio (TWLO) has been one of 2020’s success stories. Shares have more than tripled as the cloud communications specialist has made the most of the pandemic necessitating a shift toward remote work.

In Q3, revenue increased by 51.8% to $448 million, beating consensus estimates by $40.8 million. The company posted a beat on the bottom line, too, as Non-GAAP EPS of $0.04 came ahead of the Street’s forecast by $0.08.

The software maker saw out the quarter with 208,000 active customer accounts, a 21% year-over-year uptick.

However, the strong results were not enough to please investors and shares slipped after the company guided for a wider loss in the current quarter.

For the December quarter, the company expects revenue between $450 million to $455 million, higher than the analysts’ forecast for $437 million. Yet, following recent investments, Twilio now anticipates EPS between -$0.08 to -$0.11 in Q4 compared to the Street’s call for adjusted EPS of $0.01.

Nevertheless, Canaccord analyst Michael Walkley is nonplussed by the expected loss. The 5-star analyst believes Twilio remains “well positioned to achieve long-term targets” and expects “greater profitability and cash flow generation even as the company continues to make investments to drive future growth.”

Walkley further said, “We maintain our belief Twilio is the leading CPaaS company and an integral centerpiece of customer digital transformation plans, and the company should remain a long-term beneficiary of the new world order as the company executes on its go-to-market strategy. Given the mounting strength in Twilio’s core business and accretive Segment acquisition, we believe the shares have additional upside despite the strong performance year-to-date.”

As a result, Walkley increased his price target from $380 to $385, implying possible upside of 30%. Needless to say, Walkley’s rating stays a Buy. (To watch Walkley’s track record, click here)

There’s widespread support for Twilio on Wall Street. The analyst consensus rates the stock a Strong Buy based on 19 Buys and 3 Holds. At $344.29, the average price target suggests share will appreciate by 19.5% over the next months. (See Twilio stock analysis on TipRanks)

To find good ideas for stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a newly launched tool that unites all of TipRanks’ equity insights.

Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.