- Twilio shares rose more than 5% on Monday after KeyBanc reiterated its Overweight rating and $330.00 price target.
- Analyst Alex Kurtz believes that proprietary data for credit and debit cards is positive for consumer on demand segments and adds to earlier bullish sentiments.
- The stock turned a corner during Monday's session, but technical indicators continue to show a bearish bias over the intermediate term.
KeyBanc analyst Alex Kurtz initially raised his price target from $270.00 to $330.00 per share in early August, citing solid second quarter results with elevated expectations driven by COVID-19 use cases and a 150% increase in WhatsApp usage. The analyst also sees tailwinds in health care, education, and consumer on demand driving a higher FY21 revenue multiple.
A price target is an analyst's projection of a security's future price. Price targets can pertain to all types of securities, from complex investment products to stocks and bonds. When setting a stock's price target, an analyst is trying to determine what the stock is worth and where the price will be in 12 or 18 months.
During Monday's session, the KeyBanc analyst doubled down on these sentiments by adding that Twilio's proprietary data for credit and debit cards is positive for consumer on demand segments, such as ride share and delivery services. Kurtz believes that this is being interpolated into broader positive consumer trends.
Last quarter, Twilio reported revenue that rose 45.7% to $400.8 million, beating consensus estimates by $31.97 million, and non-GAAP earnings of $0.09 per share, beating consensus estimates by $0.17 per share. Shares initially fell following the earnings despite numerous analysts upgrading their outlook and price targets.
From a technical standpoint, the stock broke down from the 50-day moving average earlier this month before turning a corner during Monday's session. The relative strength index (RSI) rebounded to neutral levels of 48.82, but the moving average convergence divergence (MACD) remains in a bearish downtrend. These indicators suggest that the rally could be short lived.
Traders should watch for a breakout from Fibonacci resistance at $236.36 toward trendline resistance at around $278.00. If the stock breaks down, traders could see a move to test lower trendline support at around $220.00. If the stock breaks out, traders could see a retest of prior highs at around $290.00.
The Bottom Line
Twilio shares moved sharply higher on Monday after KeyBanc reiterated its Overweight rating and $330.00 price target, citing proprietary data for credit and debit cards. While the breakout could be a turning point, technical indicators remain bearish in the intermediate term.
The author holds no position in the stock(s) mentioned except through passively managed index funds.