Shares of Twilio Inc. fell sharply Wednesday after BofA Securities’ Michael Funk pulled an about-face on the customer communications software company, swinging to bearish from bullish just one day before third-quarter earnings are scheduled for release.

Funk downgraded Twilio by two notches, to underperform from buy, which makes him the only bearish analyst of the 36 surveyed by FactSet. Funk also slashed his stock-price target by 51%, to $85 from $175.

The stock TWLO, -0.09% sank 10.2% to $67.39, while the Nasdaq Composite Index COMP, -1.15% shed 3.4% and the S&P 500 index SPX, -0.84% fell 2.5%.

Funk gave three main reasons for his sudden U-turn on Twilio’s stock:

First, a recent survey of 348 users of DevSecOps, or security tools, indicated that usage and spending intentions with Twilio are declining, as 52% of those responding to the survey expected to spend less on the platform in 2023 than they did in 2022.

“Our survey supports a more cautious view of [Twilio’s] usage-based model in the short term as enterprises reduce discretionary spending or seek lower-cost alternatives,” Funk wrote in a note to clients.

Second, after speaking with a number of “key” Twilio partners, Funk said it appears “competitive pricing pressure may be intensifying,” with Twilio priced at a premium. In addition, the market sales cycles for businesses have lengthened, and while appetite for CPaaS (communications platform as a service) adoption is strong, usage and spending is trending lower.

And third, the consensus analyst estimate for fiscal year 2023 revenue has fallen just 1.8% over the past six months, but Funk believes that does not fully reflect macroeconomic risks to Twilio’s usage-based model.

“We believe there is downside risk to FY23 consensus revenue, which has not kept pace with the deteriorating economic environment,” Funk wrote.

He cut his 2023 revenue forecast to $4.74 billion from $4.93 billion, compared with the FactSet consensus of $4.91 billion.

Twilio is scheduled to report third-quarter results after Thursday’s closing bell. Analysts surveyed by FactSet expect the company to swing, on average, to an adjusted per-share loss of 39 cents from a profit of a penny a share.

Revenue is expected to rise 31.5% to $973.5 million.

For the fourth quarter, the FactSet consensus for per-share losses is 12 cents and for revenue is $1.07 billion.

Twilio’s stock has plunged 74.4% year to date through Wednesday, while the Nasdaq Composite has tumbled 32.7% and the S&P 500 has dropped 21.1%.