Market Overview

DA Davidson Says Its Dropbox Estimates Could Be Conservative: 'We Believe Shares Should Outperform'

DA Davidson Says Its Dropbox Estimates Could Be Conservative: 'We Believe Shares Should Outperform'

Ahead of Dropbox Inc. (NASDAQ: DBX)'s IPO, D.A. Davidson initiated coverage of the company with a Buy rating and $22 price target.

The stock listed on the Nasdaq March 23 and recorded a 35.6-percent gain on its debut. The stock is up 43 percent through Friday since its listing. 

The Analyst

D.A. Davidson analyst Rishi Jaluria maintained a Buy rating on Dropbox and raised the price target from $22 to $36.

The Thesis

An investment in Dropbox now is less risky than buying shares before the company went public, Jaluria said in a Monday note.

D.A. Davidson raised its 2019 estimates for Dropbox, and Jaluria said even more upside could be realized than what's reflected in the sell-side firm's estimates. The firm expects Dropbox to notch 16-percent customer growth and 0.7-percent ARPU growth over the next two years. 

"While we acknowledge there may be further volatility in Dropbox's share price in the near term, especially as [the] lock-up period expirations approach, we believe shares should outperform over the next 12-18 months." 

Dropbox is unlikely to invest in an enterprise sales force, as its focus is on teams rather than massive enterprise-wide deployments, Jaluria said. 

What differentiates Dropbox from Alphabet Inc (NASDAQ: GOOG) (NASDAQ: GOOGL)'s Google Drive and Microsoft Corporation (NASDAQ: MSFT)'s OneDrive is that Dropbox aims to serve as "a neutral third-party that can operate well with products from Microsoft, Google, Adobe Systems Incorporated (NASDAQ: ADBE), Slack and others," the analyst said. 

The Price Action

Dropbox shares were down 3.8 percent at the time of publication Monday. 

Related Links:

Where The Dropbox IPO Ranks Among Recent Tech Offerings

7 Big Companies That Could Tap The IPO Markets In 2018

Photo courtesy of Dropbox. 

Latest Ratings for DBX

Oct 2019AssumesBuy
Aug 2019MaintainsNeutral
Aug 2019Initiates Coverage OnUnderperform

View More Analyst Ratings for DBX
View the Latest Analyst Ratings

Posted-In: DA Davidson Rishi JaluriaAnalyst Color Price Target Reiteration Analyst Ratings Best of Benzinga


Related Articles (ADBE + DBX)

View Comments and Join the Discussion!

Latest Ratings

EGYCanaccord GenuityInitiates Coverage On2.7
PVBCCompass PointInitiates Coverage On13.0
GPSCredit SuisseDowngrades14.0
TWTRMKM PartnersAssumes44.0
MCredit SuisseDowngrades12.0
View the Latest Analytics Ratings
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Trading Daily
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Daily Analyst Rating
A summary of each day’s top rating changes from sell-side analysts on the street.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at

Wall Street Has Not Loved Bank Earnings So Far

BTIG Sees Limited Upside For Globus Medical, Downgrades To Neutral