The IaaS public cloud services market grew by over 40% last year. Naturally, notable names in this rapidly growing industry are well appreciated and trading at high valuations. But Piper Sandler’s Brent Bracelin says it’s still not too late to invest in this sector if you go to where there’s “controversy”.
Why Bracelin likes Twilio Inc
By controversy, he means companies that are under-appreciated, trading at a discount, with significant potential for growth. One such name in particular that pops out to him is Twilio Inc (NYSE: TWLO). On CNBC’s “TechCheck”, he said:
We think Twilio is mispriced. Twilio could become the next $10 billion revenue business before Snowflake, which has a market cap of $100 billion, versus Twilio at only $57 billion. These direct-to-consumer tailwinds driving Twilio will continue to make it a bigger business than people give it credit for today.
In its latest reported quarter, Twilio noted an annualised growth of 66.9% in total revenue to $668.9 million.
Bracelin’s outlook on the sector as a whole
Bracelin expects cloud penetration to jump from the current 13% to more than 50% by the end of the decade that further bolsters his thesis that there’s still opportunity to make money out of this sector.
Within the cloud space, the Piper Sandler analyst forecasts “front office” to cool down a little bit but remains quite bullish on “back office”.
Another name that he says is mispriced with potential for significant upside is Coupa Software Inc (NASDAQ: COUP) that is currently down roughly 30% on a year-to-date basis.
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