On Thursday, Northland Capital Markets issued a rating change for Twilio (NYSE:TWLO), moving the company's stock from Outperform to Market Perform. The firm has maintained its $66 price target for the shares. The decision comes after Twilio's announcement of a solid fourth quarter for 2023 and its guidance for pro forma organic growth of 5-6% in the first quarter of 2024.
Twilio is currently conducting an operational review of its Segment business unit, which has not met performance expectations. The outcome of this review could potentially lead to the sale of the unit. According to the analyst, such a sale might have implications for Twilio's artificial intelligence strategy.
Despite the downgrade, Northland Capital Markets has increased its FY24 earnings per share (EPS) estimate for Twilio to $2.65, up from the previous estimate of $2.25. This adjustment is based on an anticipated revenue growth of 2% for the fiscal year.
The analyst's valuation of Twilio's stock is grounded in a price-to-earnings (P/E) multiple of 25 and a price-to-earnings-growth (PEG) ratio of 1.7 times. These metrics are meant to provide a framework for assessing the company's current stock price in relation to its earnings growth potential.
Twilio's recent quarterly performance and forward-looking growth estimates have been key factors in the analysis leading to the rating downgrade and maintained price target. The company's ongoing review of its Segment unit and its implications for Twilio's broader strategy will be closely watched by investors and market analysts alike.
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