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Barclays analyst Ryan MacWilliams downgraded Twilio (NYSE:TWLO) to Equal Weight from Overweight with a $110.00 per share price target, down from the prior $175.00.
The analyst believes that Twilio’s core API business potentially faces challenges going forward due to a slowing digital economy. Moreover, MacWilliams “had hoped to see better progress with Segment/Engage at this point.”
“With this backdrop in mind, it is possible macro headwinds could put Twilio to a decision: either maintain top-line performance with lower gross margin international SMS revs. or pivot to improved profitability with lower rev. Growth,” the analyst said in a client note.
Still, the analyst says he could be wrong if Twilio manages to accelerate organic growth in Q3. This could prompt investors to buy Twillio stock as shares would simply be “too cheap at 6x CY23 eV/gross profit and potentially 30%+ organic growth.”
Twilio stock price is down 1% today.
