Why 5 Twilio Analysts Are Slashing Price Targets After Earnings

Zinger Key Points
  • Twilio’s numbers don’t seem to have bottomed, one analyst says
  • The company has a strong market position and customer relationships, another analyst states.

Shares of Twilio Inc TWLO Thursday tumbled on disappointing quarterly revenue and projections.

BofA Securities On Twilio

Analyst Michael Funk reiterated an Underperform rating while reducing the price target from $85 to $70.

“We believe management is making the correct strategic decisions for longer-term competitive success and profitability,” Funk said in a note.

External factors seem to be driving below-forecast growth and “adjusted commentary on profit dollars versus margin represent a shift the bull thesis didn’t anticipate which will take some time to digest,” he added.

Morgan Stanley On Twilio

Analyst Meta Marshall maintained an Overweight rating, while lowering the price target from $100 to $70.

Neither the third-quarter results nor the fourth-quarter guidance offered the “gross margin floor investors were looking for,” Marshall said. There are also “bigger impacts to growth from macro,” the analyst added.

Check out other analyst stock ratings.

Needham On Twilio

Analyst Ryan Koontz reaffirmed a Buy rating while slashing the price target from $140 to $60.

“Management noted that its usage-based communications segment has seen an increasingly challenged macro slow its consumer-centric verticals exiting 3Q” and that operating margins could break even in 2023, Koontz mentioned.

“TWLO is reducing investment in communications (currently ~84% of revenue) to focus on gross profit via self-service sales, while increased investment in its three software applications, Flex, Segment and Engage, are aimed to drive high, profitable growth,” the analyst wrote. “While we acknowledge the TWLO transformation will take many quarters, we see key value in a strong market position and customer relationships,” he said.

Mizuho Securities On Twilio

Analyst Siti Panigrahi maintained a Buy rating while reducing the price target from $125 to $75.

The stock has nosedived due to Twilio’s disappointing guidance for the fourth quarter, “lowering of mid-term revenue guidance to 15-25% with no GM trend, and lack of detail on 2023 Op margin,” Panigrahi said in a note.

“However, management is focused on profitable growth and plans to deliver positive non-GAAP operating margins in 2023 with 100-200 bps expansion yearly and reiterated its longer-term target of 20%+,” the analyst stated. “While we were disappointed with management's commentary about near-term growth (exacerbated by macro headwinds), we believe the stock has hit a low at these current levels,” he added.

JMP Securities On Twilio

Analyst Patrick Walravens reaffirmed a Market Outperform rating while cutting the price target from $175 to $110.

“We believe the company's new medium-term framework that calls for y/y growth of 15-25% and non-GAAP operating margin expansion of ~1-3% per year (beyond 2023) will provide a much-needed reset of estimates,” Walravens wrote in a note.

TWLO Price Action: Shares of Twilio had declined by 33.81% to $43.26 at the time of publication on Friday morning.

Photo: Tada Images via Shutterstock

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Posted In: Analyst ColorEarningsNewsPrice TargetReiterationTop StoriesAnalyst RatingsMoversTrading IdeasBofA SecuritiesJMP SecuritiesMeta MarshallMichael FunkMizuho SecuritiesMorgan StanleyNeedhamPatrick WalravensRyan KoontzSiti Panigrahi
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