Twilio Initiated Outperform at Cowen on Market Potential

Cloud-communications builder Twilio has an underappreciated asset: 7 million innovation-centered developers. Cowen says, initiating the stock at outperform.
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Twilio  (TWLO) - Get Report shares are higher after the cloud-communications-platform builder was initiated outperform at Cowen, which says the company is “just scratching the surface” of a large total addressable market.

The $150 price target Cowen set indicates 20% potential upside from the stock’s Thursday closing price of $124.81. 

Analyst J. Derrick Wood estimates that Twilio has amassed 7 million developers on its platform. He calls that an underappreciated asset that “will become increasingly important as developers are more instrumental in digital projects.”

The company’s developer-centric model is far larger than that of any of its competitors, enabling it to innovate its ecosystem rapidly, Wood says.

Wood sees the fourth quarter as a rebound opportunity for Twilio. Even after a 28% runup since Dec. 30, the stock remains 20% off from its mid-2019 high point, the analyst noted. (The stock touched $151 in mid-June.)

Twilio also has a long growth runway ahead as additional growth levers emerge. Those levers include the introduction of new customer-engagement solutions and the buildout of a direct sales force.

“Twilio is evolving from a voice and short-messaging-service application programming interface vendor to a full-fledged communications-platform-as-a-service-solution provider, positioning the company to be a more strategic vendor for a multitude of digital transformation initiatives,” Wood wrote. 

"Its large developer ecosystem and unique developer-driven operating model give it a competitive advantage over legacy infrastructure peers.”

At last check Twilio shares were 0.7% higher at $125.69.

Twilio is a holding in Jim Cramer's Action Alerts PLUS Charitable Trust Portfolio