Analysts at JMP maintain a bullish stance on Box Inc (NYSE:BOX) after the company reported its first-quarter results, in which revenue and earnings per share came in better than Wall Street expected.
JMP's Greg McDowell commented in a research report that Box's billings in the quarter rose 31 percent year over year to $99.6 million and came in above the $97.2 million Wall Street expected. The earnings report also marked the company's second consecutive and second-ever free cash flow positive quarter, and also showed strength in its major business drivers of cross-sell and partner momentum.
Box signed 25 deals in the quarter worth over $100,000, which marks a 47-percent improvement from a year ago, the analyst noted. In fact, one-third of the deals consisted of partners like International Business Machines Corp. (NYSE:IBM) that teamed up for two of the largest international deals in the quarter.
Stepping Back
Box's stock remains attractive to McDowell for three core reasons:
- A long runway of growth of at least 25 percent as the company has plenty of room to expand its platform business, cross-sell additional products and gain traction with large partners.
- There exists significant leverage in the company's model, especially in sales and marketing.
- The competitive environment is weakening at a time when Box is seeing momentum.
McDowell concluded that at $19 per share, "Box's valuation implies a 4.5x EV/CY 2018E multiple while a $22 price target implies a 5x multiple, which is still a discount to the peer group median of 6.5x."
At last check, Box shares were up 6.63 percent at $19.93.
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