A Potential Earnings Play For This Cloud Storage Company

Shares of Box Inc BOX remain volatile ahead of the earnings announcement scheduled for Wednesday after the bell.

Currently, Street analysts are expecting the company to incur a loss of $0.19 a share on revenue of $94.65 million. Revenue is estimated to grow 28.9 percent. There has been no change in estimates over the last three months.

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In the preceding four quarters, Box delivered positive surprises ranging between 3.4 percent and 25 percent in three quarters and in-line loss per share in one quarter. One of the factors that could weigh on the results is customer preference regarding add-on products. Bank of America Merrill Lynch said recently that its checks pointed out these were done on a selective basis.

The brokerage sees mid- to high-single-digit duration impact on billings in the second quarter. Analyst Joyce Yang expects pipeline to provide enough strength in the billing in the second half of the current year.

On the flip side, Box has been investing continuously and hiring more personnel. This could have some impact on its financial numbers.

Other Voices

Benzinga took the time to ask Jeff Epstein, CEO of Ambassador, if traders should be bullish heading into the earnings release.

He responded affirmatively, supported by three points:

• 1. "It's [Box is] undervalued given growth rate, market cap and market size."
  2. "They are in a less competitive space than the market suggests ([In my opinion, there isn't much competition from Dropbox)."
  3. "At sub-$2 billion market-cap, it's a no-brainer acq target from a large software / services company looking enter this growing market."

Furthermore, the following brokerages have given their ratings on Box in August:

• Bank of America reiterated its Buy rating.
• Oppenheimer maintains its Outperform rating.
• Vetr reiterated its Strong Buy rating.
• Stifel Nicolaus maintains its Hold rating.

At time of writing, Box was up 1.35 percent on the day, trading at $13.50.