Twilio is at an inflection point, and that could be bad news for investors in the short term, according to Barclays. Analyst Ryan MacWilliams downgraded the communications software stock to equal weight, saying that a slowdown in the digital economy means Twilio may need to tighten its belt at the expense of growth, especially in its lower margin international businesses. "This could create the possibility of deceleration in consolidated organic revenue growth, and we believe shares could see near-term pressure if TWLO embarks on this higher profitability, lower growth path forward," wrote MacWilliams, who previously rated Twilio overweight. "That said, we view more sustainable/profitable growth as favorable in regard to current investor sentiment, we just believe TWLO's current shareholder base could see turnover in the interim." Twilio said on an earnings call last month that it expects to turn an operating profit on a non-GAAP basis in 2023, but that hasn't reassured investors who have largely abandoned unprofitable companies in 2022. Shares of Twilio are down 60% year to date. Even if the move to focus on margins hurts in the near term, it may be necessary for Twilio to prove to investors that it will be a strong company long-term, Barclays said. "We believe TWLO's terminal margin profile will continue to act as a point of uncertainty for investors given increased pressures on messaging GM and a shifting mix to intl. revenues. We believe TWLO shares deserve a lower multiple (despite strong growth rates) given uncertain FCF margin potential," MacWilliams wrote. Barclays slashed its price target to $110 per share from $175. The new target is just 5.5% above where Twilio's stock closed on Wednesday. — CNBC's Michael Bloom contributed to this report.