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On Friday, Mizuho (NYSE:MFG) Securities expressed a positive outlook on Twilio Inc. (NYSE:TWLO), with analyst Siti Panigrahi increasing the company's price target to $150 from the previous $140, while retaining an Outperform rating on the stock. Currently trading at $113.40, Twilio is near its 52-week high of $117.92, with InvestingPro data showing 24 analysts have recently revised their earnings estimates upward for the upcoming period. The adjustment follows Twilio's Investor Day, where the company presented its Twilio 2.0 strategy, which focuses on innovation and aims to drive double-digit revenue growth following an operating model turnaround.
The analyst noted Twilio's management team's commitment to achieving double-digit revenue growth in the second half of 2024, despite conservatively reiterating a 7-8% guidance due to the company's usage-based model. According to InvestingPro, Twilio maintains strong financial health with an overall score of 3.01/5, supported by a solid current ratio of 5.06 and more cash than debt on its balance sheet. Additionally, the firm has raised its FY27 operating margin forecast to 21-22%, with the potential for further increases if revenue growth accelerates. Twilio also announced plans for $3 billion in cumulative free cash flow (FCF) from 2025 to 2027 and a $2 billion share buyback program, intending to return 50% of its FCF to shareholders each year.
The report further highlighted Twilio's momentum in its core products and key verticals, including self-serve, cross-sell opportunities, and partnerships with independent software vendors (ISVs). These factors are believed to reinforce the company's ability to sustain double-digit growth. For detailed insights into Twilio's growth potential and comprehensive financial analysis, investors can access the full Pro Research Report, available exclusively on InvestingPro, which covers over 1,400 top US stocks. Mizuho's stance is that the guidance provided by Twilio sets the stage for future quarters where the company may outperform expectations, especially if macroeconomic trends improve, cross-selling increases, and new AI products gain traction.
In support of the raised price target, the analyst cited a valuation of 30 times the enterprise value to next twelve months' free cash flow (EV/NTM FCF). This financial metric is used to assess the value of a company's ability to generate cash and is a key indicator for investors. The revised price target reflects a confidence in Twilio's growth trajectory and its strategic initiatives aimed at delivering long-term shareholder value.
In other recent news, Twilio announced preliminary fourth-quarter revenue growth that surpassed average analyst estimates and authorized a $2 billion share buyback plan. This move is typically seen as a sign of the company's confidence in its own stock. Analyst firms Piper Sandler, TD Cowen, and Wolfe Research have all raised their price targets for Twilio, maintaining various ratings on the stock. The upgrades came after Twilio's Analyst Day event, which brought positive pre-announcement and upward revisions to the company's free cash flow estimates for 2025-2027.
Twilio'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. The company also reported that Dana Wagner, the Chief Legal Officer and Corporate Secretary, has decided to resign, effective from January 1, 2025. No successor has been named yet.
In terms of product development, Twilio has launched a public beta release of Linked Audiences for Amazon (NASDAQ:AMZN) 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 are the recent developments for Twilio.
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