Twilio And 2 Other SmidCap Earnings Reviews From Goldman

Goldman Sachs reviewed the earnings of mid-cap technology companies: Twilio Inc TWLO, Mimecast Ltd MIME and Rackspace Hosting, Inc. RAX.

Twilio beat on all key metrics in its debut quarter on strong demand across all of its product lines, including voice, messaging, and two-way authentication. The company also issued an upbeat outlook, beating consensus view.

"At ~12x our updated CY17 sales estimate in the aftermarket, we believe valuation remains full and maintain Neutral," analyst Heather Bellini wrote in a note.

However, Bellini increased price target to $37 from $33.

On Mimecast, the analyst remains on the sidelines given the potential for increasing competition from large players and pricing pressure. That said, Bellini acknowledged the company's execution and is seeing its investments in the U.S. market starting to pay off. The analyst also raised the price target by $1 to $11.

Mimecast reported better-than-expected earnings for the first quarter, and sees third quarter revenue in the range of $41.5 million to $41.9 million. The company raised its full-year revenue in the range of $172 million to $175.6 million from $170.2-$175.9 million. Consensus estimate calls for revenue of $41.80 million for the second quarter and $171.41 million for the full year.

In addition, Bellini remains Neutral on Rackspace as the company expects increased churn in the UK post the Brexit decision. However, the analyst raised price target to $23 from $21.

Rackspace reported second quarter revenue of $524 million (+9 percent yoy normalized) topped Street view of $521 million. Non-GAAP EPS was $0.38 versus Street of $0.32.

For the third quarter of 2016, Rackspace expects revenue to be between $510 million and $515 million. For CY16, the company guided revenue of $2.06 billion - 2.08 billion (+3 to +4 percent yoy) below last quarter's guide of $2.08-$2.16 billion. Street expects revenue of $530.14 million for the third quarter and $2.11 billion for the full year.

At the time of writing, shares of:

• Twilio were up 0.56 percent to $42.74. Earlier, they touched a 52-week high of $45.69.
• Mimecast climbed 10.60 percent to $13.98 before touching a 52-week high of $15.84.
• Rackspace also gained 5.56 percent to $30.20.