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Last week, you might have seen that Twilio Inc. (NYSE:TWLO) released its yearly result to the market. The early response was not positive, with shares down 5.2% to US$118 in the past week. The results look positive overall; while revenues of US$1.1b were in line with analyst predictions, statutory losses were 8.0% smaller than expected, with Twilio losing US$2.36 per share. Analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. We thought readers would find it interesting to see analysts' latest (statutory) post-earnings forecasts for next year.
Taking into account the latest results, the current consensus from Twilio's 24 analysts is for revenues of US$1.49b in 2020, which would reflect a substantial 31% increase on its sales over the past 12 months. Yet prior to the latest earnings, analysts had been forecasting revenues of US$1.46b and losses of US$1.79 per share in 2020. Analysts seem to have become more bearish following the latest results. While there were no changes to revenue forecasts, there was a large cut to EPS estimates.
As a result, there was no major change to the consensus price target of US$144, with analysts implicitly confirming that the business looks to be performing in line with expectations, despite higher forecast losses. The consensus price target just an average of individual analyst targets, so - considering that the price target changed, it would be handy to see how wide the range of underlying estimates is. There are some variant perceptions on Twilio, with the most bullish analyst valuing it at US$165 and the most bearish at US$105 per share. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.
One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. We would highlight that Twilio's revenue growth is expected to slow, with forecast 31% increase next year well below the historical 44%p.a. growth over the last five years. By way of comparison, other companies in this market with analyst coverage, are forecast to grow their revenue at 11% next year. So it's pretty clear that, while Twilio's revenue growth is expected to slow, it's still expected to grow faster than the market itself.
The Bottom Line
The most obvious conclusion is that analysts made no changes to their forecasts for a loss next year. Fortunately, analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations - and our data does suggest that Twilio's revenues are expected to grow faster than the wider market. The consensus price target held steady at US$144, with the latest estimates not enough to have an impact on analysts' estimated valuations.
Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. We have estimates - from multiple Twilio analysts - going out to 2022, and you can see them free on our platform here.
Another thing to consider is whether management and directors have been buying or selling stock recently. We provide an overview of all open market stock trades for the last twelve months on our platform, here.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.
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