Twilio Can Generate Around 10% Growth With Margin Expansion, Says Bullish Analyst

Shares of Twilio Inc TWLO were rising in early trading on Monday after having lost almost 15% over the past month.

The company has the ability to generate double-digit growth and improve operating margins, driven by cross-sell motions, according to Morgan Stanley.

The Twilio Analyst: Meta Marshall upgraded Twilio’s rating from Equal-Weight to Overweight, while raising the price target from $144 to $160.

The Twilio Thesis: The sell-off of around 20% in the company's shares after the release of fourth-quarter results appears "overdone, creating attractive buying opportunity," Marshall said in the upgrade note.

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Channel checks indicate that Twilio's "cross-sell motions have runway to recovery, which in turn should also help drive larger deals," he added.

In the core business, messaging and email are likely to continue driving double-digit growth "on back of continued traction in self-serve / ISV / cross-sell channels," the analyst stated.

"Our base case credits ~10% CAGR and achievement of operating margin targets a year ahead, given flow through of revenue upside to 7-8% growth targets," Marshall further wrote.

TWLO Price Action: Shares of Twilio had risen by1.85% to $116.42 at the time of publication on Monday.

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