Mizuho upgrades Twilio to 'outperform,' raises price target by $55

Investing.com -- Mizuho upgraded Twilio Inc (NYSE:TWLO ) to "outperform" and lifted price target to $140 from $85 given improving revenue visibility and operational efficiency ahead of the company's January 23 Investor Day.

With Twilio shares up 50% in 2024, outperforming the Nasdaq's 30% gain, Mizuho (NYSE:MFG ) believes further clarity on growth and margins could drive continued outperformance.

The firm highlighted that the factors like stabilising top-line growth with a preliminary 2025 revenue outlook of 7-8%, a sharp turnaround in operating margins from -0.1% in 2022 to an estimated 16% in 2024, and potential for a new share buyback program, was driving the upgrade.

Twilio’s core communications business is showing improved execution, and innovations like Voice AI and new product growth are expected to support double-digit revenue growth from 2025 onwards. Investor confidence could rise as management outlines a refreshed mid-term growth outlook.

Mizuho also sees significant upside to 2025 operational income, noting that the company's core communications business and Segment are expected to achieve key milestones. Twilio is poised to benefit from easing margin headwinds, including the phase-out of a $100 million cash bonus program.

Source: Investing.com