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Twilio Initiated Buy at Mizuho With Strong Growth Prospects

Mizuho Securities analysts initiated Twilio shares with a buy rating, citing the company's pioneering effort in the communications-platform-as-a-service market.
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Twilio  (TWLO)  shares rose in a down market after Mizuho Securities initiated coverage of the cloud communications company with a buy rating and $125 share-price target.

“Twilio, being a pioneer of the [communications platform as a service] market, has been moving up the stack from voice/[short message service application programing interfaces] and disrupting legacy communication vendors,” Mizuho analysts, led by Siti Panigrahi, wrote in a report.

“We expect the company to sustain robust growth, benefiting from the API economy and adoption of cloud contact centers. 

"With a differentiated technology, a breadth of products, a large [total addressable market], robust growth, and room to expand margins, Twilio remains attractive at current levels.”

And the coronavirus pandemic offers a reward for Twilio, the analysts wrote.

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Its Flex product, a programmable contact center platform, “stands to benefit from covid-19, as our checks suggest it was a significant wakeup call to adopt cloud-based contact centers and messaging platforms,” the analysts said.

“In turn, this should help create a more predictable revenue stream, and drive long-term growth.”

Twilio has the top technology in the CPaaS market, “led by its super network of carriers and proprietary software layered on top,” the analysts said. “Its API-based architecture and reliability make it easier for developers to adopt.”

At last check, Twilio shares traded at $100.80, up 2%. That compares with a 2.84% decline for the S&P 500.

Twilio stock has fallen 15% over the past three months, compared with a 16% slide for the S&P 500.