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Investing.com - William Blair has reiterated an Outperform rating on Twilio (NYSE:TWLO), citing the company’s growth acceleration and margin expansion potential. With revenue of $4.58 billion and a gross margin of 50.55%, InvestingPro analysis suggests the stock is currently trading below its Fair Value.
The firm highlighted that Twilio trades at 18.4 times its 2026 free cash flow estimate, representing a premium compared to peers trading at 16.9 times. William Blair expects its estimates to increase as Twilio continues to execute on growth and margin expansion initiatives. The company’s strong performance is reflected in its impressive 101.86% return over the past year.
William Blair expressed encouragement about Twilio’s growth acceleration, noting that demand trends appear solid and the company is well-positioned to capitalize on these opportunities. The firm also sees significant room for margin expansion over the longer term.
Despite acknowledging a near-term investment ramp, William Blair remains confident in Twilio’s ability to achieve its medium-term target of 21%-22% operating margin. The firm sees potential upside to these targets if Twilio delivers double-digit growth.
William Blair considers Twilio’s current valuation attractive given the potential upside to revenue and free cash flow in coming years, supporting its Outperform rating on the stock. Analyst consensus aligns with this view, with price targets ranging from $75 to $170. For deeper insights into Twilio’s valuation and growth metrics, access the comprehensive Pro Research Report available on InvestingPro.
In other recent news, Twilio reported a 13% revenue growth year-over-year for the second quarter, surpassing consensus estimates by 3.4%. The company also provided above-consensus revenue guidance for the third quarter. Following the earnings report, Goldman Sachs reiterated its Buy rating with a $145 price target for Twilio. JMP Securities maintained its Market Outperform rating with a $165 price target, citing positive indicators from industry insights and the company’s strategic direction. Twilio also announced the launch of new platform features aimed at enhancing customer engagement, including Event Triggered Journeys, Data Residency for Email in the EU, and WhatsApp Business Calling on Programmable Voice. These developments are part of Twilio’s ongoing efforts to improve its customer engagement capabilities. Additionally, Twilio’s annual user conference, Signal 2025, highlighted strategic insights from the company’s leadership, reinforcing JMP’s confidence in the company’s future.
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