Box's Big Picture Gives Investors Big Upside, New Oppenheimer Note Says

• The share price of Box Inc BOX has appreciated 5.44 percent over the past month, although the shares dipped to a low of $12.475 on December 3.
• Oppenheimer’s Ittai Kidron has maintained an Outperform rating on the company, with a price target of $21.
• Kidron expressed optimism regarding the company’s positioned and robust expansion opportunities, while viewing the big picture as positive for improvement in the net expansion rate and margin growth.

Analyst Ittai Kidron said, “We took a deeper look at Box's 3QFY16 performance metrics and come away positive on its long-term prospects.”

Kidron believes that management is doing an “excellent job” of sustaining absolute free user costs flat year-on-year, despite the growth in Box's free user base.

Although the net expansion rate continued to decline during the quarter, Kidron believes that there could be potential for a reversal in about 6-12 months, given that seat penetration is still low, as is churn, while new product and sales/channel pipeline is still to fully ramp.

“Monthly ASP has also moved down, but this reflects a positive mix shift and not degradation of existing like-for-like customer pricing. Overall, we're positive and expect continued progress toward cash positive results,” Kidron mentioned.

The company added 4,000 new paying companies as customers during the company, as well as 580,000 new paying users, representing the strongest net adds so far in FY16.