2023-05-12 09:06:40 ET
Twilio ( NYSE: TWLO ) shares slipped around 1% in pre-market trading on Friday after investment firm Mizuho downgraded the communications software company, citing "near-term" challenges.
Analyst Siti Panigrahi lowered the firm's rating on Twilio ( TWLO ) shares to neutral from buy and slashed the per-share price target to $55 from $90, noting the weaker-than-expected guidance highlighted a "difficult macro backdrop" and tougher comparisons stemming from crypto currencies that are likely to pressure near-term growth, even if margins start to improve.
"While we remain positive on TWLO's leadership in [cloud communications platform as a service] and potential to become a B2C [customer relationship management] platform with Engage, we expect TWLO's growth to remain subdued in the near-term and thus lower our estimates," Panigrahi wrote in an investor note.
In addition, Panigrahi noted that Twilio's ( TWLO ) consumption-based model is hurting it as it deals with renewal contraction and more "budget-conscious" customers in the current environment.
Growth this year is also expected to be impacted by the company's go-to-market execution problems it suffered last year.
Looking ahead, the Jeff Lawson-led Twilio ( TWLO ) expects second-quarter sales to be between $980M and $990M, below the $1.05B analysts were expecting. Adjusted earnings are expected to be between 27 and 31 cents per share, with the mid-point in-line with the 29-cent-per-share consensus.
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Twilio continues slide as Mizuho downgrades, citing 'near-term' challenges