On Friday, Piper Sandler’s analysts increased their price target on Twilio shares (NYSE:) to $142 from the previous figure of $94, while maintaining an Overweight rating on the stock. The upgrade followed Twilio’s first analyst day since November 2022, which took place after the market closed. The event prompted a rise in Twilio’s shares in after-hours trading, buoyed by a positive pre-announcement, as well as upward revisions to the company’s free cash flow (FCF) estimates for 2025-2027. According to InvestingPro data, Twilio’s stock has surged over 101% in the past six months, with 24 analysts recently revising their earnings estimates upward for the upcoming period.
The analysts at Piper Sandler expressed confidence in Twilio’s management and their ability to sustain high-single digit growth. This optimism is partly driven by the company’s strategic shift towards Independent (LON:) Software (ETR:) Vendors (ISVs), enhanced cross-selling, and an increase in self-service options. Twilio’s growing engagement in AI applications and use-cases was also highlighted as a positive factor contributing to the company’s traction in the market. InvestingPro analysis reveals that Twilio maintains a strong financial position, with more cash than debt on its balance sheet and a current ratio of 5.06, indicating robust liquidity.
The recent analyst day provided Piper Sandler with reassurance that Twilio’s medium-term growth rates, as well as its operating margin (OPM) and FCF targets, are conservatively set. According to the firm, this positions Twilio well for potential future earnings outperformance. Twilio’s communication software is particularly favored by Piper Sandler due to the company’s free cash flow upside potential, sustainable growth rate supported by multiple drivers, an improved competitive landscape, and what the firm considers a reasonable valuation. Based on InvestingPro’s comprehensive analysis, which includes over a dozen additional key metrics and insights available to subscribers, Twilio’s Fair Value assessment suggests the stock currently trades near its intrinsic value.
In their comments, Piper Sandler analysts stated, “Twilio remains our favorite name in Communication software given the FCF upside potential, sustainable-growth rate at these levels with multiple-drivers (particularly ISVs), better competitive landscape, and reasonable valuation. Reit. OW, PT to $142.” This aligns with InvestingPro’s Financial Health Score of “GREAT,” reflecting strong cash flows and growth potential, though investors should note the company’s high EBITDA valuation multiple.
Twilio’s focus on AI and the company’s strategic initiatives are expected to continue to play a significant role in its growth trajectory. The raised price target reflects Piper Sandler’s increased confidence in Twilio’s future financial performance and market position.
In other recent news, Twilio Inc. has been the focus of several positive developments. The company’s Q3 2024 revenue saw a 10% year-over-year increase, reaching $1.13 billion, with a substantial contribution of $1.06 billion from its Communications segment. Analysts from Tigress Financial Partners and Monness, Crespi, Hardt upgraded Twilio’s stock to Buy, setting a new price target of $135.00. Additionally, Wolfe Research raised its price target for Twilio to $155, maintaining an Outperform rating.
Twilio’s Chief Legal Officer, Dana Wagner, has announced his resignation, effective from January 1, 2025, with no successor named yet. In terms of product development, Twilio has launched a public beta release of Linked Audiences for Amazon (NASDAQ:) Redshift, a feature aimed at boosting customer engagement. This development has contributed to a 35% year-over-year increase in Twilio Segment’s growth in the AWS Marketplace.
These recent developments reflect the ongoing growth and changes within Twilio. It’s important for investors to stay informed about these changes as they consider their investment strategies.
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