Shares of Twilio (NYSE: TWLO) jumped as much as 10.2% early Monday, then settled to close up 8.4% thanks to a combination of the broader market's gains and an encouraging analyst note.
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On the former, major market indices notched broad-based gains today, including a nearly 2.1% rise from the tech-heavy Nasdaq Composite. Considering stocks just capped a difficult week in which the Nasdaq lost more than 4%, it's no surprise to see high-flying names like Twilio rebounding harder than most.
Likely fueling Twilio's fire, however, was a positive note that came early in Friday's abbreviated session from Oppenheimer analyst Ittai Kidron, who reiterated his "outperform" rating and $110 per-share price target on the cloud communications platform leader -- representing a more than 25% premium even after today's rise.
To justify his continued bullishness, Kidron argued there's "strong upside potential" from Twilio's impending acquisition of SendGrid. Keeping in mind that Twilio shares plunged after the all-stock deal was announced last month, Kidron noted that Twilio's recently filed proxy documents reveal that not only were SendGrid's forecasts above consensus estimates, but also that the equity agreement was ultimately accepted "as offering superior value" to four previous cash offers after Twilio shared its own better-than-expected internal forecasts.
To be clear, Twilio has already more than tripled so far in 2018. But after combining the recent momentum created by Twilio's exceptional third-quarter report earlier this month, the expected synergies and rationale behind the acquisition, and Kidron's insight from Twilio's recent proxy filings, it seems he isn't exactly going out on a limb with his glowing endorsement of the stock. If Twilio can sustain that momentum and follow through as planned with the SendGrid purchase, I suspect investors will see many more all-time highs in the years ahead.
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