Box Guidance Miss: What Wall Street Thinks

Box Inc BOX shares crashed 20 percent Thursday after the company reported its fourth-quarter earnings.

Box reported $163.7 million in revenue for the fourth quarter, missing consensus analyst estimates of $164.2 million. Box also fell short with its first-quarter guidance, calling for revenue of between $161 million and $162 million, well short of consensus analyst estimates of $166.2 million.

Several analysts have weighed in on Box since the report. Here’s a sampling of what they’ve had to say.

Consistently Inconsistent

Wells Fargo analyst Philip Winslow said the earnings report is not the type of box investors were hoping to open.

“We view FQ4 results as disappointing, given that we had expected accelerating billings growth due to disruptive impact of Box’s go-to market changes made early in FY2020 continuing to subside and improving attach rates of add-on products lifting deal sizes across all tiers (not just for low six-figure transactions, which did indeed occur),” Winslow wrote in a note.

He remains positive on Box’s market positioning and product portfolio but is getting increasingly frustrated with the company’s financial inconsistency.

KeyBanc analyst Rob Owens said Box’s report revealed more growing pains in a highly anticipated quarter.

“Although Box remains a compelling asset over the medium term, the innovation of the Company's offering appears to have outpaced the maturity of the sales motion upmarket,” Owens wrote. He said lackluster numbers from the EMEA segment and longer-than-expected sales cycles for some large deals are particularly disappointing.

Silver Lining?

D.A. Davidson analyst Rishi Jaluria said Box may ultimately end up a buyout target for a private equity firm.

“Given the disappointing quarter, reset to numbers, and potentially growing investor unrest, we believe Box may emerge as a potential private equity takeout target,” Jaluria wrote.

He said Box’s differentiated technology and impressive market penetration would certainly have value for private equity investors.

Ratings And Price Targets

• Wells Fargo has an Outperform rating and $27 target.
• KeyBanc has a Sector Weight rating and no target.
• D.A. Davidson has a Buy rating and $25 target.

Shares traded around $19.87 at time of publication.

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