HSBC raises its recommendation for Twilio to Hold from Reduce and raises its price target to 215 dollars from 211 dollars. The upgrade is justified by the stock having fallen around 32 percent since September 24 and previous AI-related valuation premiums having consequently declined, according to a recent analysis.
The bank notes that AI is driving increased voice traffic but has not yet had a clear impact on gross profit. In the third quarter, organic growth amounted to 16 percent, while gross profit increased by 18 percent.
HSBC considers the valuation to remain high relative to the evidence of AI-related earnings. The stock trades at a forward P/E ratio of 30.9, compared with the sector median of 20.6.
The raised price target is based on an upwardly revised earnings-per-share forecast of 6.71 dollars from 6.40 dollars and corresponds to upside of around 4 percent.
