10 Stocks to Buy and Sell Before the Third Quarter 2024 According to Jim Cramer

5. Twilio Inc (NYSE:TWLO)

Number of Hedge Fund Investors: 45

Cloud-based communications solutions Twilio Inc (NYSE:TWLO) is one of the stocks Jim Cramer is bearish on. When asked about the stock in a latest program, Cramer said:

“I still can’t recommend Twilio Inc (NYSE:TWLO)”

Morgan Stanley analyst Meta Marshall recently downgraded the stock to Equal-Weight from Overweight citing lack of growth catalysts for the next 12 months. The analyst also cut their price target on the stock to $60 from $70.

“The primary reason we are stepping to the sidelines on Twilio Inc (NYSE:TWLO) is a lack of a revenue catalyst over the next 12-18 months, limiting multiple expansion and potentially challenging ability to meet FY25 Street expectations. For Segment (<10% of revenues today), given itssale is largely an enterprise software sale vs. a developer sale (as much of the rest of the Twilioplatform is) combined with a number of key changes to structure / leadership, we think it shouldtake some time for growth to reaccelerate,” the analyst said.

However, the analyst said they still like the stock’s “long-term” story. Twilio Inc (NYSE:TWLO) Q1 results show Twilio is quickly improving its business and narrowing losses. During the first quarter its loss narrowed to $55.3 million when compared with a $342.1 million loss reported last year.  Restructuring costs in the quarter came in at $9.9 million, down from $121.9 million  reported last year.  Gross profit margins rose from 48.75% to 51.96%.  Twilio Inc (NYSE:TWLO) expects organic revenue growth of 5% and 10% this year. Adjusted operating income in the period is expected in the range of $585 million and $635 million up from $550 million and $600 million.

Average analyst price target on the stock for the next 12 months is $68.52, which presents a 22% upside potential. Given the improvement trajectory Twilio Inc (NYSE:TWLO) is on, the stock can be a nice option for long-term investors.