Why JPMorgan Is Turning Bullish On Twilio Ahead Of Q4 Report

Cloud communications company Twilio Inc TWLO is scheduled to report its fourth-quarter results Feb. 17, with analysts, on average, forecasting more than 37% revenue growth and a loss of 8 cents per share.

The Twilio Analyst: JPMorgan analyst Mark Murphy upgraded Twilio shares from Neutral to Overweight and increased the price target from $300 to $465.

The Twilio Thesis: Digital acceleration is alive and well, and JPMorgan's view of "pandemic as forcing function" to adopt these technologies will become incrementally clearer, Murphy said in a Tuesday upgrade note. 

The speed of exploration, experimentation, adoption of new channels and consideration of more complex use cases among Twilio's enterprise customers is improving, the analyst said.

Company-specific tailwinds are also propelling Twilio's business in 2021, he said. 

Related Link: Why Stifel Is Bullish On Twilio: 'Clear Leadership, Category-Defining Position'

More CEOs are now looking to Twilio as a strategic partner for customer engagement, rather than just a communication layer, Murphy said. 

JPMorgan leaving Twilio off its recommendation list in the second half of 2020 was a "glaring mistake," the analyst said. 

Specific tailwinds that are expected to drive solid growth-at-scale for Twilio include elevated enterprise presence; eventual improvement in COVID-19-impacted sectors, including travel, rideshare and hospitality; increasing adoption of two-way messaging; Segment acquisition synergies; and early traction with newer products including Flex, Video and Frontline, according to JPMorgan. 

TWLO Price Action: Twilio shares gained 1.76% in Tuesday's session, closing at $406.57. 

Related Link: Twilio Reducing Its Reliance On Uber, And That's A Good Thing

Image: Twilio.