Twilio Inc (NYSE: TWLO) is in the process of transforming from being a software provider for voice and SMS services to a strategic vendor for customer engagement solutions, according to Cowen.
The Twilio Analyst
Derrick Wood initiated coverage of Twilio with an Outperform rating and $150 price target.
The Twilio Thesis
Twilio is now targeting a large total addressable market of around $40 billion and seems poised for a rebound in the fourth quarter, which would lend upside to the stock, Wood said in the Friday initiation note. (See his track record here.)
The stock is still trading around 20% lower than its mid-2019 highs, mainly due to growing pains and a small delay in ramping new Flex customers, the analyst said.
Most of the billings issue is in the rearview mirror and checks indicated a strong upturn in Flex activity in the fourth quarter, he said.
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Twilio has around 7 million developers on its platform, which seems to be largely underappreciated, Wood said.
The company has grown fast on the back of its low-touch, developer-oriented sales model, the analyst said. Additional growth drivers are emerging, like the new customer engagement solutions and a direct sales force, that could help Twilio become a multibillion-dollar company, he said.
Twilio Price Action
Shares of Twilio had risen almost 1% to $126.02 at time of publication.