Twilio Inc (NYSE:TWLO) received a higher price target from Bank of America, which raised its target to $235 from $225 and reiterated a 'Buy' rating, citing increased confidence in the cloud communications company’s execution and cross-selling strategy.
This price target implies significant upside from current levels of about $183.
The firm said accelerating gross profit dollar growth remains the key driver for Twilio shares and believes the company can sustain that momentum as customers adopt more multi-product communication tools, including AI, voice and multi-channel offerings.
Bank of America also raised its valuation multiple to 27 times estimated 2027 free cash flow from 26.6 times previously, saying the higher target reflects stronger confidence in Twilio’s execution potential.
The bank analyzed Twilio’s product-level gross margin trends, noting messaging products carry margins in the low-30% range, while email products generate margins in the mid-80% range.
The analysts wrote that a shift toward higher-margin, non-messaging products could support further gross margin expansion over time.
The firm also outlined scenario analyses for the business. In its base case, it expects slower growth in messaging and email alongside accelerating growth in voice and other communications products.
A bullish scenario assumes faster growth and margin expansion across non-messaging products, while the bearish case assumes weakening growth and margins across most segments.