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Twilio Stock: Next Stop, $150?

Rick Munarriz, The Motley Fool

One of last year's hottest stocks is on fire again in 2019, and at least one Wall Street pro sees Twilio (NYSE: TWLO) moving even higher. Deutsche Bank analyst Michael Turrin is bumping his price target on the stock from $130 to $150, the highest price goal for the provider of in-app communication solutions, according to S&P Global Market Intelligence

Turrin attended the Enterprise Connect conference in Orlando this week, and he feels that we're still in the early innings of the cloud-based communications market. Twilio with its developer-fueled model is upending multiple markets. It's making investors a lot of money in the process. 

Guests coming and going to last year's Twilio Signal conference.

Image source: Twilio.

There's an app for that 

Twilio became a wealth changer last year, soaring 278% in 2018. There is no larger company with a greater return among stateside-listed investments. The good times continue in 2019, as the stock is up another 52% so far this young year.

The key to Twilio's appeal for developers is that communication needs can be met within the app. The next time your Lyft driver lets you know that she's waiting for you or when you need to reset your aunt's Hulu password, it can all be done within the cozy confines of the app itself. There are now 64,286 active customers leaning on Twilio for at least some of their in-app offerings, 31% more than it had a year earlier. 

Revenue is growing even faster at Twilio as developers and end users alike find themselves relying more and more on the sticky features. Revenue soared 77% in the latest quarter, the fourth time in a row that year-over-year gains on the top line have accelerated. Twilio's dollar-based net expansion rate is also picking up as the platform becomes more engaging, clocking in at 147% in the fourth quarter (its strongest retention in two years). 

Deutsche Bank's Turrin joins Goldman Sachs at the high-water mark of $150 as a price target for Twilio, but that's not likely to last long if the shares keep moving higher. As long as the fundamentals keep improving -- and that's exactly what we've seen happen over the past year and change -- the bulls will need to keep moving their goals further out. 

Growth might decelerate at this point. Guidance calls for revenue to climb 72% to 74% in the current quarter and 64% to 66% for all of 2019, but Twilio has been historically conservative in its public forecasts. The shares aren't cheap, but they also didn't seem cheap a year ago and now Twilio has appreciated 475% in value since the start of last year. A strong first quarter could keep the party going. 

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Rick Munarriz has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Twilio. The Motley Fool has a disclosure policy.