Priced In? Analysts Weigh In On Twilio's Earnings, Sell-Off

Twilio Inc TWLO stock dropped 4 percent Wednesday after the company reported first-quarter earnings and revenue beats.

Twilio reported a first-quarter net loss of $36.5 million, a 54 percent wider loss than the same quarter a year ago. Adjusted EPS was 5 cents, slightly above consensus analyst estimates of 1 cent. First-quarter revenue of $233.1 million was up more than 80 percent from a year ago and above analyst expectations of $223.7 million.

Despite the strong quarter, traders took profits on Wednesday, cashing in on the stock’s 210 percent one-year gain. Several analysts have weighed in on Twilio following Tuesday’s report. Here’s a sampling of what they’ve had to say.

Impressive Growth Priced In

Morgan Stanley analyst Meta Marshall said the stock’s weakness is likely a reflection of the fact that the beat was already priced in ahead of the report.

“We think the ~4% revenue beat in Q1 was built into expectations,and without meaningful changes to paths to market or speed at which new products are getting adopted, current valuation (~13x20e rev) builds in opportunity,” Marshall wrote in a note.

Marshall said Twilio shares are already pricing in 25 percent annual revenue growth over the next 15 years.

Guggenheim analyst Nandan Amladi said Twilio’s growth trajectory is solid.

“We see the SendGrid cross-sell opportunity as very early in its development and expect revenue growth to sustain also from other new products on the roadmap,” Amladi wrote. He said Twilio’s 60 percent organic growth and 146 percent dollar-based net expansion were particularly impressive from a growth perspective.

Bank of America analyst Nikolay Beliov said SendGrid and Flex call center offerings provide potential revenue upside for Twitch in coming quarters.

“Flex could add $50mn-$200mn+ on top of current CY20 Street ests and should be accretive to margins LT,” Beliov wrote. He said Twilio has a clear path to at least $2 billion in annual revenue by 2021.

Ratings And Price Targets

• Morgan Stanley has an Equal-Weight rating and $130 target.
• Bank of America has a Buy rating and $160 target.
• Guggenheim has a Buy rating and $150 target.

At time of publication, Twilio's stock traded down 3.5 percent at $132.31 per share.

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