This post was originally published on this site
https://i-invdn-com.investing.com/news/LYNXNPEC0L0PD_M.jpg
The analysts cut the rating from Overweight to Neutral, while increasing its price target to $71 from $56.
“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,” they commented.
In addition, they view the CPaaS sector as the emerging counterpart to the CDN space, and with the software portfolio slowing, Twilio is likely to deploy its $3.5 billion in cash for additional software mergers and acquisitions, despite limited investor interest.
Moreover, the management team has already implemented internal initiatives to enhance performance, such as reducing the workforce by more than 25%, divesting underperforming divisions, and addressing go-to-market and structural challenges. The consolidation of the dual-share class took place on 6/28, and they anticipate that margins and free cash flow can surpass the Street’s estimates. Although the management remains steadfast in keeping CPaaS and Software integrated, given the present valuation, they believe there is limited potential for upside based on a sum-of-the-parts valuation.
