HSBC downgrades Twilio to Reduce on ‘low-growth’ profile

HSBC last night downgraded Twilio to Reduce from Hold with a price target of $61, down from $62. Twilio is trading at a large premium to similar “low-growth” companies in the sector on non-GAAP valuation metrics, the analyst tells investors in a research note. The firm believes investors will be increasingly inclined to treat the company’s share based compensation and “recurring one-offcosts” as a regular expense, given the company’s low-growth profile. Meanwhile, Twilio’s core communications business faces increasing competition while efforts to expand the Data and Applications segment have not yet brought sufficient success and scale, says HSBC.