On Friday, Twilio Inc. (NYSE:TWLO) received a vote of confidence from Piper Sandler, with the firm raising its price target on the shares to $83.00 from $77.00. The firm maintained its Overweight rating.
Following the release of Twilio's recent financial results, which showed a slight reacceleration in reported revenue and improvements across business units, the stock experienced an uptick of over 5% in after-hours trading.
The company's updated financial year 2024 EBIT (earnings before interest and taxes) and FCF (free cash flow) targets were highlighted as being above the second quarter beat that the buyside expected to be carried through.
Piper Sandler's analyst noted Twilio's early signs of success in its go-to-market and operational initiatives, which could lead to increased cross-selling and customer retention.
Twilio's recent quarter demonstrated the effectiveness of its strategic measures, with the analyst pointing out that the "messiness" has been removed from the business. This change means that reported revenue will now be equivalent to organic revenue, simplifying financial analysis.
The analyst believes that with the company's revenue reacceleration, expanding EBIT/FCF, and prudent targets, the risk-reward profile for Twilio remains positive.
The increase in the price target reflects the firm's view that Twilio has proven its ability to execute on its plans in the quarter. The company's revenue and operational income present an upside opportunity, and with the conservative yet higher free cash flow projections, Piper Sandler reiterated its Overweight rating on the shares.
InvestingPro Insights
Twilio Inc. (NYSE:TWLO) has not only caught the attention of Piper Sandler but is also standing out with some notable metrics and actions as per InvestingPro data. The company's market capitalization is currently valued at approximately $9.63 billion, and it has been showing a dedication to shareholder value with management aggressively buying back shares. This is a strong signal of confidence from the company's leadership in its future prospects. Additionally, Twilio holds more cash than debt on its balance sheet, providing it with a solid liquidity position to support its growth strategies.
While the company's P/E ratio stands at -14.16, signaling that it is not profitable over the last twelve months, analysts have a positive outlook, predicting that Twilio will turn profitable this year. Furthermore, the revenue growth has been steady, with a 5.99% increase over the last twelve months as of Q1 2024, and a gross profit margin of 50.02%, indicating efficient cost management relative to its sales.
For investors seeking more detailed analysis and additional insights, there are over 20 more InvestingPro Tips available, including insights on earnings revisions and shareholder yield. These tips can provide a deeper understanding of Twilio's financial health and future prospects. For more information, visit the InvestingPro platform for Twilio at https://www.investing.com/pro/TWLO.
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