Twilio Inc. (NYSE: TWLO) is now coming off of the quiet period after its initial public offering (IPO) and calls have been made by quite a few analysts. Among them were Goldman Sachs, JPMorgan, JMP Securities, William Blair, Pacific Crest and Canaccord Genuity. Overall, the company has been a big hit in the market, with the stock practically tripling from its original pricing.
24/7 Wall Street secured a report from JMP Securities further detailing the brokerage firm’s position on Twilio. It has a Market Perform rating with a $43 price target.
The company entered the market with a bang. It ended up pricing its IPO at $15, above of the expected price range of $12 to $14. However, it actually entered the market close to $25. There were 10 million shares in the offering, with an overallotment option for an additional 1.5 million. Since this time, the stock has climbed as high as nearly $45.
Twilio believes the future of communications will be written in software by the developers of the world. By empowering them, Twilio’s mission is to fuel the future of communications. Cloud platforms are a new category of software that enable developers to build and manage applications without the complexity of creating and maintaining the underlying infrastructure. These platforms have arisen to enable a fast pace of innovation across a range of categories, such as computing and storage. Twilio is the leader in the Cloud Communications Platform category. This company enables developers to build, scale and operate real-time communications within software applications.
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According to JMP Securities:
We are initiating coverage of Twilio, the leading cloud platform for communications, with a Market Perform rating as we believe shares are fairly valued at current levels, having already appreciated 187% from its $15 IPO price (vs. up 4% for NASDAQ), and as it is trading at a 2017E EV/revenue multiple of roughly 13x. In our opinion, Twilio is a remarkable business that, much like Amazon Web Services (AWS) (AMZN, MO, $775 PT, Josey), plays a critical role for software developers by allowing them to easily and securely build communications services such as voice, messaging, video, and authentication into their software applications and then scale those services elastically and globally. In our view, positives associated with Twilio include: 1) it is a business-to-developer model, founded by developers, including CEO Jeff Lawson, and it offers a compelling value proposition for developers, characterized by its ease of use, scalability, and simple pay-as-you-go pricing model; 2) Twilio addresses a large market that the company estimates is as big as $46B, although we believe the immediately addressable market is the cloud platform-as-aservice (CPaaS) market, which IDC estimates will be $8B in 2018; 3) strong financial characteristics, with 61% base revenue growth projected for 2016 powered, in part, by a best-in-class, dollar-based net expansion rate that hit 170% in 1Q16; 4) a dominant market position, with over 900,000 developers on its platform, making Twilio nearly five times larger than two of its most direct competitors, Nexmo (114,000) and Tropo (200,000+); and 5) a customer base that includes many well-known brands, including Airbnb, Uber, Lyft, salesforce.com (CRM, MO, $92 PT), and Zendesk (ZEN, MO, $28 PT).
A few other analysts offered their thoughts on Twilio as well:
- Goldman Sachs has a Neutral rating.
- JPMorgan has a Neutral rating.
- William Blair has an Outperform rating.
- Pacific Crest has a Sector Weight rating.
- Canaccord Genuity has a Hold rating.
Shares of Twilio were trading at $41.03 on Monday, with a consensus analyst price target of $39.75 and a post-IPO trading range of $23.66 to $44.80.
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