Twilio stock sees significant upgrade from Goldman Sachs amid promising forecasts

In the United States, Goldman Sachs upgraded its rating on Twilio shares from neutral to buy on January 26, 2025. Analyst Kash Rangan increased the price target to $185 per share from the previous $77, indicating a potential increase of over 35% from Friday's market close. This rating upgrade follows Twilio's strong performance, which included a notable 20% surge on January 26. The surge followed an analyst day where Twilio provided improved forward guidance, which reassured investors about the company's future performance. In recent times, Twilio has emphasized cost-cutting measures and aims to bring in $3 billion in free cash flow over the next three years, a significant jump from the $692 million forecast for the years 2022, 2023, and 2024. Kash Rangan highlighted the company as reaching an inflection point in its operational and strategic frameworks. He articulated that Twilio’s growth story has the potential to recover following previous periods of growth compression, bolstered by a clearer strategy moving forward. Despite the recent increase in stock price, analysts remain divided on Twilio's outlook. Data from LSEG shows that 18 out of 31 analysts rate the stock either a buy or strong buy, while 13 maintain a hold or underperform rating. This division is indicative of the skepticism that still exists regarding Twilio’s medium to long-term prospects, juxtaposed with optimism surrounding its recent strategic initiatives and performance trajectory. The market's positive reaction to Twilio's strategic realignments, including its focus on generative AI innovations, further supports the notion that the stock has room for growth. Rangan remarked that the stock remains a compelling entry point, suggesting that investor confidence may be bolstered as Twilio implements its turnaround strategy and as increased revenue forecasts come into play in the 2025 calendar year.