UPDATE: Pacific Crest Upgrades Twilio (TWLO) to Overweight as Analyst Sees Improved Risk/Reward

(Updated - January 5, 2017 8:25 AM EST)

Pacific Crest upgraded Twilio (NYSE: TWLO) from Sector Weight to Overweight with a price target of $36. Analyst Brent Bracelin pointed out more favorable risk/reward following the stock's recent sell-off.

"Our upgrade is predicated on: (1) an increasingly favorable risk/reward after the 55% sell-off during 4Q16, (2) multiple upside levers to consensus estimates of 30% growth in 2017, and (3) increasing probability of reaching profitability by year-end. We are establishing a price target of $36, applying a target EV/S multiple of 8.0x our 2017 estimates, which is a slight premium to the historical peer-group average of 7.1x and well below the peer-group peak levels of 9.7x," said Bracelin.

"We are raising estimates and upgrading TWLO to Overweight based on: (1) an upward bias to 2017 consensus estimates of 30% revenue growth vs. 60.8% in 2016, (2) increasing probability that it reaches profitability by year-end, (3) underappreciated growth potential inherent in a usage-based model similar to AWS, and (4) an attractive risk/reward with shares now valued at 5.8x and 4.6x EV/sales on 2017 and 2018 estimates," added the analyst.

For an analyst ratings summary and ratings history on Twilio click here. For more ratings news on Twilio click here.

Shares of Twilio closed at $27.51 yesterday.

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