It’s no secret that it hasn’t been an easy run for growth stocks and that includes Twilio (NYSE:TWLO). In fact, TWLO stock is down 70% from its highs, even after yesterday’s 10.5% rally. However, the fact of the matter is that this is a very good company.
Twilio is a customer engagement platform for businesses and developers, which create unique way to interact with its customers. Communication between a company and its customers is paramount, and so is the need for Twilio’s services. It counts several large companies as its customers, such as Lyft (NASDAQ:LYFT), Airbnb (NASDAQ:ABNB), Yelp (NYSE:YELP), Twitter (NYSE:TWTR), Twitch, Uber (NYSE:UBER), eBay (NASDAQ:EBAY) and many more.
In the company’s own words, it helps companies: “Connect with customers on their preferred channels—anywhere in the world. Quickly integrate powerful APIs to start building solutions for SMS and WhatsApp messaging, voice, video, and email.”
Despite Goldman Sachs analysts cutting Twilio’s price target from $300 to $262, the stock still offers potential. In the case of Goldman Sachs’ target, it implies roughly 100% upside potential from current levels. In all, Wall Street’s average price target on TWLO stock sits at $310, implying more than 125% upside from current levels.
More specifically, here are some of the recent analyst notes from this month:
- Barclays, Buy Rating, $250 Price Target
- Piper Sandler, Buy Rating, $270 Price Target
- Needham, Buy Rating, $350 Price Target
The fundamental drivers for Twilio are clear: It has built a strong moat with impressive revenue growth. However, there’s no denying that its stock is caught up in a nasty bear market. It hasn’t helped that Twilio does not generate any meaningful profit, either.
That said, its long-term prospects remain bright.
Twilio is actually forecasted to become profitable next year, while its growth revenue is expected to increase between 30% and 35% in each of the next three years. It says something that consensus revenue estimates for 2021 through 2024 continue to rise even though TWLO stock price continues to fall.
To me, this is indicative of a broken stock, not a broken company.
On the date of publication, Bret Kenwell did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.