Box’s stock has lost more than 44 percent since it started trading in the New York Stock Exchange in late January.
However, over these months, management “has executed well and has consistently added incremental layers of functionality that have made their solution more attractive and differentiated from the set of ‘generic’ competitors,” analysts Richard Davis, Jr.; David Hynes, Jr.; and Mark Belcarz assured in a recent report.
While they do not envision any “epic announcements” in next week’s user conference, the experts do expect to hear further news on features and functionality, as the company continues to execute against its strategy.
Fundamentals And Model
Given Box’s fundamentals and Canaccord’s model, the analysts believe the company can deliver upside to both revenue growth and the arrival of positive free-cash-flow in the fourth quarter of 2016.
Given that the current valuation stands at 3.5X C2016E EV/revenues, the firm does not see further multiple compression as a likely scenario, unless there’s an “earnings whiff or full market meltdown” – neither of which they actually expect. Thus, the shares now look attractive enough to warrant an upgrade.
While this is not a “pound-the-table buy,” the analysts do believe Box is worthy of consideration for the speculative segment of an equity portfolio, especially given the outstanding fundamentals of software stocks.
Disclosure: Javier Hasse holds no positions in any of the securities mentioned above.
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