The investing community still seems as though it is unable to get enough of the artificial intelligence trade. Twilio Inc. (NYSE: TWLO) has now been public for about 8 years. Its shares surged from 2020 into 2021 during the work from home craze, but the stock ended up falling from almost $400 back down to $50. Now Twilio is back as an AI stock.
After a significant analyst upgrade and a new street-high analyst price target, Oggonomics wants to know if Twilio can recapture its former glory or whether the latest run-up is already baking in too much in gains. After all, its shares have just pole-vaulted past almost all of its price targets that were hiked just two-weeks earlier. This is a situation where a binary outcome seems likely — either analysts will have to refresh their price targets much higher or issue valuation downgrades on a $15 billion stock.
As of 2023, Twilio counted over 300,000 active customer accounts. From that, it counted 34 billion calls made and received each year, 167 billion-plus messages sent and received each year, and 1.9 trillion-plus emails sent each year.
Oggonomics always reminds its readers that no single analyst call, no matter how convincing the call is, should ever be the sole basis for making the decision to buy or sell a stock. Oggonomics also has no formal rating nor any price target itself on Twilio.
WELLS FARGO UPGRADE
Wells Fargo raised Twilio’s formal investment rating to Overweight from Equal-Weight. Perhaps more important is that the firm’s price target was ramped up to $120 from $80, and Wells Fargo had just raised that target to $80 from $75 on November 1. Twilio had jumped from about $72 to $80 at the end of October — and most recently its stock just kept climbing to more than $95.
Wells Fargo is viewing Twilio as a derivative call on artificial intelligence agents, front office, and digital transfer. The firm sees Twilio positioning itself as a “pick-and-shovel” play in the AI build-out cycle. Its strong upside call is backed up with the view that Twilio’s re-focused efforts on capturing the independent software vendors channel will work. This includes its AI natives.
As for the AI agents, Wells Fargo sees Twilio having higher volumes over a multi-year horizon along with potential improvement in cyclical exposures with margin-accretive channels delivering sustained growth for Twilio.
MANY RECENT TARGETS ARE ALREADY TOO LOW
Oggonomics tracked many Twilio analyst calls on October 31 and November 1 after its earnings. Again, it was on November 1 that Wells Fargo raised its target to $80 from $75.
As you will see, most are going to need an immediate price target refresh or the stock will need to downgraded out of valuation achievement as the current gain of 3% to $97.00 was above almost all of the targets. That stock jumped from $72 to over $80 in those days and continued higher since.
This is the list for those two days of about a dozen analysts reiterating their ratings and raising their price targets (in alphabetical order):
- Baird (Neutral) to $80 from $65
- Barclays (Equal-Weight) target to $80 from $65
- Goldman Sachs (Neutral) to $77 from $67
- JPMorgan (Overweight) to $83 from $78
- Mizuho (Neutral) to $70 from $60
- Morgan Stanley (Equal Weight) to $77 from $70
- Needham (Buy) to $91 from $71
- Northland (Market Perform) to $86 from $66
- Oppenheimer (Outperform) to $90 from $85
- Piper Sandler ((Overweight) to $94 from $83
- TD Cowen ((Hold) to $85 from $70
- UBS (Buy) to $88 from $74
DISCLAIMER
All ratings and price targets have been mentioned on Twilio have been issued by the firms named in this report. Oggonomics has no formal price targets nor any formal rating on Twilio. As such, all investing decisions are up to each investor and the decision to buy, sell, hold or avoid should be made with the help of a financial advisor.
