2023-07-17 07:46:05 ET
Twilio ( NYSE: TWLO ) shares fell 1.8% in pre-market trading on Monday as Piper Sandler downgraded the enterprise software company, citing an "uncertain" macro environment and upcoming "messiness."
"While Twilio may be finding more stability than prior quarters as crypto and other headwinds abate, the macro-environment uncertainty and recent divestitures will create 'messiness' for sales estimates ahead that are likely too high," analyst James Fish wrote in an investor note.
Fish lowered his rating on Twilio ( TWLO ) shares to neutral from overweight but boosted his per-share price target to $71 from $56.
In addition, Fish said that the communications-platform-as-a-service space is likely to be the new content delivery network area, meaning companies will incorporate multi-sourcing, usage models, networks as the key value proposition. Other similarities include slower growth than expected, the dependency on events, pricing being dictated by carriers and valuations stuck between telecom companies and software companies.
There are also worries that with Twilio's ( TWLO ) software portfolio continuing to slow, the company may need to use its $3.5B in cash for additional acquisitions, with management having already pulled levers to help itself.
In addition, Fish also noted that estimates for the second-half of 2023 through 2025 look "too high" when including the recent divestitures.
Analysts are largely bullish on Twilio ( TWLO ). It has a HOLD rating from Seeking Alpha authors , while Wall Street analysts rate it a BUY . Conversely, Seeking Alpha's quant system, which consistently beats the market, rates TWLO a STRONG BUY .
More on Twilio
- Barclays 'cautious' on Twilio, more positive on Hubspot, others ahead of Q2 results
- Twilio: Driving Digital Customer Engagement On A Global Scale
- Twilio: Still Cheap Even After Activist-Driven Rally
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Twilio slips as Piper Sandler downgrades on 'messiness,' uncertain macro