Investing.com -- Goldman Sachs raised Twilio (NYSE: TWLO ) to Buy from Neutral on Monday, citing the company’s transition to a stronger growth trajectory and improving fundamentals.
The firm also raised its price target on Twilio to $185, more than doubling its prior target of $77, reflecting increased confidence following the company’s 2025 Analyst Day.
According to Goldman analysts, Twilio is "now hitting an inflection point both in terms of narrative and fundamentals" after years of growth challenges and strategic restructuring.
The company’s "major cost reduction initiatives and ongoing efficiency measures" are driving strong free cash flow (FCF) generation, complemented by a growth profile that Goldman expects to accelerate in the second half of 2024.
Twilio’s initial guidance for 2025—forecasting +7-8% revenue growth—is considered conservative by Goldman.
The analysts project growth will pick up to over 10% in the latter half of 2024, bolstered by "usage trends inflecting."
The note highlighted Twilio’s efforts to enhance its Communications portfolio, positioning it to expand its leading share in the Communications Platform as a Service (CPaaS) market.
Twilio is also said to be unlocking new opportunities with CDP-enabled Communications products, which tap into artificial intelligence to deliver innovative use cases.
Goldman stated that these developments signify an "accelerated product velocity and an improved go-to-market motion," reinforcing the company’s turnaround story.
At an estimated valuation of 21x EV/FCF for 2026, Goldman believes Twilio offers a "solid upside to Revenue/FCF in CY25" with shares at a “compelling entry point.”