Twilio To Top 3Q Sales Fueled By Cloud Demand; Shares Surge 10%

Shares of Twilio soared 9.8% in Thursday’s extended trading session after the company said revenues for the quarter ended September 30, 2020 (third-quarter) will be higher than its previously announced guidance.

In an SEC filing, Twilio (TWLO) said “that it preliminarily expects that total revenue for the quarter ended September 30, 2020 will be ahead of the Company’s previously issued guidance of $401 million to $406 million.” Wall Street analysts are projecting 3Q revenues of $403.7 million, reflecting year-over-year growth of 37.1%.

The cloud service platform provider is benefiting from accelerated digital transformation in the wake of the COVID-19 pandemic-induced work-from-home trend. On August 4, Twilio reported 2Q revenues of $400.8 million, which increased 46% year-over-year. The company’s adjusted EPS jumped three-fold to $0.09 year-on-year. (See TWLO stock analysis on TipRanks)

On Oct. 1, Oppenheimer analyst Ittai Kidron reiterated a Buy rating and a price target of $300 (16.7% upside potential) on the stock, after attending Twilio’s virtual Investor Day. Kidron said that “We have a high degree of confidence in Twilio’s outlook as it’s underpinned by a growing number of new use cases (healthcare, Flex, IoT, etc.), which have been accelerated by COVID-19 (digital communications accelerated by six years).”

Overall, the Street has a bullish outlook on the stock. The Strong Buy analyst consensus is based on 17 Buys and 4 Holds. With shares up over 161% year-to-date, the average price target of $294.50 implies further upside potential of about 14.6% to current levels.