Morgan Stanley upgraded Twilio (TWLO, Financials) to Overweight from Equal-Weight, citing improving execution and a clearer path to profitability. The firm also raised its price target for the stock to $160 from $144.
Analyst Meta Marshall said the stock was a good purchase because the recent selloff after the fourth-quarter results was excessive. Compared to industry rivals, the company saw that Twilio trades at 19 times expected free cash flow, rather than 24.5 times.
Morgan Stanley praised Twilio's developments in cross-selling initiatives and growing operational margin outperformance confidence. The company's fourth-quarter exit growth rate also caught the attention of the business as a positive indication that Twilio is following its long-term plan. Should sales growth slow down, operational margins might surpass projections.
Though Morgan Stanley thinks this may be accomplished a year early, Twilio management is aiming for 2122% operating margins by fiscal 2027. Key factors listed by the company were revenue upside, operational efficiency, cost cuts, AI adoption, and a change in product mix toward higher-margin sectors. Supported by great sales momentum and new feature development, Twilio's segment unit is also predicted to break even by the second quarter of 2025.
Morgan Stanley sees the stock's recent drop as excessive and positions Twilio as a buying prospect with ahead of schedule predictions for sustained development and profitability increases.
This article first appeared on GuruFocus.免责声明：投资有风险，本文并非投资建议，以上内容不应被视为任何金融产品的购买或出售要约、建议或邀请，作者或其他用户的任何相关讨论、评论或帖子也不应被视为此类内容。本文仅供一般参考，不考虑您的个人投资目标、财务状况或需求。TTM对信息的准确性和完整性不承担任何责任或保证，投资者应自行研究并在投资前寻求专业建议。