Analysts Ride The Twilio Growth Train

Twilio Inc. TWLO shares traded lower by 7 percent Wednesday after the company reported a mixed fourth quarter.

Twilio’s Q4 revenue growth of 77 percent exceeded consensus analyst expectations, but EPS was only in-line with consensus. Twilio shares were up nearly 30 percent year-to-date prior to the report, so some traders may simply be cashing in on the big move.

Several analysts have weighed in on Twilio following the report.

Impressive Growth

Bank of America analyst Nikolay Beliov said Twilio’s quarter was impressive across the board, and Twilio remains his top overall 2019 stock pick.

“Our thesis is re-enforced by 4Q results: 1) strong underlying business; 2) top 10 customer mix a continuing tailwind as % contribution of revs continues to decline from a peak of 32% in FY15 to 18% in FY18,” Beliov wrote in a note.

D.A. Davidson analyst Rishi Jaluria said Twilio has now put together an bullish string of four consecutive quarters of revenue growth.

“Shares traded down 5% in the aftermarket, in our view, due partly to 2019 profitability guidance that came in below consensus, as Twilio intends to invest aggressively,” Jaluria wrote.

SendGrid Opportunity

Rosenblatt Securities analyst Ryan Koontz said 2019 guidance, which includes the recently acquired SendGrid, appears to be conservative.

“We view the acquisition of SEND as an important element of TWLO's long term strategy to dominate the fast-growing digital customer engagement market,” Koontz wrote.

Morningstar analyst Seth Sherwood said the SendGrid deal sets Twilio up for a massive long-term growth opportunity.

“With the Sendgrid transaction now complete, the firm is poised to expand its leadership within the communication platform-as-a-service, or cPaaS, space, in our view,” Sherwood wrote.

Ratings And Price Targets

• Bank of America has a Buy rating and $130 target.
• D.A. Davidson has a Buy rating and $118 target.
• Rosenblatt has a Buy rating and $118 target.
• Morningstar has an Overvalued rating and $83 target.

Shares traded at $106.65 at time of publication, down 7.6 percent.

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