The Pullback In Twilio Creates A 'Favorable Entry Point,' Argus Says In Upgrade

Twilio Inc (NYSE: TWLO) is in the early stages of capitalizing on a tremendous market opportunity, so the recent pullback in the stock presents a "more favorable entry point," according to Argus.

The Analyst

Argus analyst Jim Kelleher upgraded Twilio from Hold to Buy with a new $75 price target.

The Thesis

Twilio acts as a facilitator of apps that companies embed in their sites to improve the customer experience, Kelleher said in the upgrade note.

Perhaps more important, Twilio's software allows developers to build, scale and offer a cloud-based communications platform as a service and enable voice, video andmessaging within a company's software platform. Encouragingly, the market for CPaaS products and services is not only "vast" but "barely tapped," the analyst said. 

Twilio's recently launched Build platform will speed up its go-to-market efforts in what the company believes is a $1.45-trillion market, Kelleher said. In the meantime, the company has not achieved a non-GAAP profitability profile, although this could be accomplished within the next year, he said.

Once Twilio achieves a sustainable profit, the stock will become more attractive, the analyst said. 

The Argus upgrade of Twilio is based on the near-term pullback in the stock, as the company's long-term profile remains as attractive now as it has been in the past, Kelleher said. 

Price Action

Twilio shares were trading up 0.72 percent at $54.69 at the time of publication Thursday. 

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