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Why Twilio Inc. Stock Jumped Nearly 12% in March

By Chris Neiger – Apr 11, 2018 at 12:38PM

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A positive investor note with a fresh buy rating boosted investor sentiment

What happened

Shares of Twilio Inc. (TWLO -4.78%) jumped 11.8% last month, according to data provided by S&P Global Market Intelligence, after Bank of America Merrill Lynch initiated coverage of the company and gave its stock a buy rating.

So what

Twilio, the cloud-based communications platform company, saw its shares pop in March following the news that Bank of America Merrill Lynch analyst Nikolay Beliov set a price target of $45 on the stock, which represented an increase of 18% at the time, and said Twilio could bring in $1 billion in revenue by 2021.

Investors were clearly pleased with the optimistic outlook from Beliov, coming just a few weeks after Twilio reported a strong fourth quarter. Sales were up 40% year over year, and the company outpaced its own guidance.

Twilio investors pushed up the company's share price about 30% in February, and the most recent share price gains in March put the company's shares up 67% since the beginning of the year.

Person looking at charts on a phone and computer.

Image source: Getty Images.

Now what

Twilio's shares started retreating a bit toward the end of March, but began their upward climb again in the second week of April after Dougherty & Co. analyst Catharine Trebnick initiated coverage of the stock with a bullish buy rating and $45 price target.

Trebnick believes the company can increase its sales by 25% for at least the next several years and that it will continue to benefit from the $69.7 billion market for communications platforms as a service.

Twilio will report its first-quarter 2018 results next month, and the company's management expects revenue between $115 million and $117 million, which would be a 37% increase at the midpoint. The company won't move into profitability just yet, and Twilio's guidance puts a non-GAAP net loss per share between $0.06 and $0.07.

Chris Neiger has no position in any of the stocks mentioned. The Motley Fool recommends Twilio. The Motley Fool has a disclosure policy.

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