Twilio (TWLO) was in focus on Wednesday as BTIG started coverage on the communications software company with a Buy rating and $165 price target.
Shares rose 0.9% in premarket trading.
“Twilio has remarkably revamped the business over the past several years, marked by material growth reacceleration, significant improvements in its margin profile, and showcasing greater capital discipline and shareholder friendliness,” BTIG analyst Nick Altmann wrote in a note to clients. “We believe shares have rightfully outperformed peers (+22% vs. +8% IGV YTD) on the heels of better execution and the winning software formula of growth reacceleration + margin expansion. However, we also believe TWLO’s best days are yet to come and see a compelling near-term and medium-term story.”
Altmann noted that the communication-platform-as-a-service market is large — around $16B this year — and is expected to “accelerate,” aided by voice, more companies building and embedding communications APIs in generative AI apps and the potential for Twilio to acquire other companies.
“Furthermore, while investor concerns linger around the winners of the application layer, TWLO is serving as the underlying communications layer for all participants,” Altmann added. “Simply put, regardless of how GenAI is monetized and by whom at the application layer (Build vs. Buy, SaaS vs. GenAI startups, B2B vs. B2C), TWLO is set to provide the necessary communications building blocks, ultimately creating an attractive growth opportunity both near- and medium-term.”