By Senad Karaahmetovic
Jefferies analysts downgraded Twilio (NYSE:TWLO) to Hold from Buy, sending shares more than 3% lower in pre-market Monday.
The analysts highlighted three key reasons why they are moving to the sidelines on Twilio stock.
- Sees sustained headwinds to near-term growth,
- Doesn't have high conviction the Software rev can grow 30%+, and
- Doesn't see the medium-term growth and margin outlook as particularly attractive.
"We believe a combo of macro headwinds and company-specific issues are likely to result in growth slowing further in 2023. On the former, we believe a slowdown in consumer activity and a tightening of marketing budgets will result in headwinds to messaging activity. We have already seen multiple private companies that leverage TWLO announce layoffs as they have seen growth decelerate," the analysts said in a client note.
The analysts would like to see more signs of success in the software business before getting more constructive on Twilio stock.
The price target is cut by over 50% to $50 per share, implying upside of about 3% relative to Friday's closing price.