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'
Jim Cramer Weighs In On Dropbox, Teva And More
Dropbox Trades Higher Following Encouraging Q3 Earnings Print
Why Docusign's Stock Price Looks Set to Soar (GuruFocus)

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

Dec 2018William BlairInitiates Coverage OnOutperform
Oct 2018NomuraUpgradesReduceNeutral
Aug 2018Canaccord GenuityMaintainsBuyBuy

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

View the Latest Analytics Ratings
Don't Miss Out!
Join Our Newsletter
Subscribe to:
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.
Fintech Focus
Your weekly roundup of hot topics in the exciting world of fintech.
Thank You
for registering for Benzinga’s newsletters and alerts.
• The Daily Analysts Ratings email will be received daily between 7am and 10am.
• The Market in 5 Minutes email will be received daily between 7am and 8am.
• The Fintech Focus email will be received every Friday between 2pm and 5pm.

Wall Street Has Not Loved Bank Earnings So Far

BTIG Sees Limited Upside For Globus Medical, Downgrades To Neutral