Yesterday in after-hours trading saw a wave of anger selling ravage one of the NYSE’s more favored companies. Box Inc (NYSE: BOX) dropped almost 20 percent this morning in response to the management team’s forecast that they’d see first-quarter losses far above what Wall Street expected. However, despite this setback, analysts remain optimistic about the company’s long-term potential.
Before reporting its financial results on late Wednesday, Box reported a strong third quarter that had most investors looking forward to their newest financial reports. However, the results were so disappointing to many that they are considering this quarter Box’s “worst execution since its 2015 IPO,” according to MarketWatch.
“It would have been cathartic to downgrade Box” said Canaccord Genuity analyst Richard Davis, writing that “the reality is that, most times, after the anger selling is done, the stock typically makes back upwards of half of the beatdown over the next month or so.” He also remains optimistic that there could be a private-equity buyout for the company anywhere between $25 to $30 per share. While he still maintains his “buy” rating for the company, the analyst ended up downgrading the company’s stock price from $30 down to $24, warning investors to not act emotion and that “This is what happens when we go out on the risk spectrum, we sometimes get burned. Let the dust settle, as it rarely makes sense to rush for the exist with everyone else.”
Morgan Stanley’s Melissa Franchi is another analyst that, while disappointed with the company’s inconsistent performance, remains adamant that there is still some value behind the company. “While there are some encouraging metrics that suggest it may just be too early, investors’ patience is likely to be tested,” she wrote. The company did see a 19 percent increase in deals worth over $100,000, but the lack of consistency in revenues is something she finds troubling. “There will likely be continued debate on the health of the core market, competitive dynamics, and Box’s ability to execute consistently.”
In comparison, Box’s stock increased by over 42 percent since reporting its third-quarter earnings back in November. At the time, the company had seen a big jump in sales and raised its estimates. Unfortunately, the company failed to secure a number of seven-figure deals.
Box Inc Company Profile
Box, Inc., incorporated on March 11, 2008, provides a cloud content management platform that enables organizations of all sizes to manage cloud content while allowing access and sharing of this content from anywhere, on any device.
With the Company’s software-as-a-service (SaaS) cloud content management platform, users can collaborate on content both internally and with external parties, automate content-driven business processes, develop custom applications, and implement data protection, security and compliance features to comply with internal policies and industry regulations
The Company also provides offerings that address targeted business needs with a combination of technology, services and marketing programs. Its platform integrates with the applications of enterprise technology providers, including Microsoft, IBM, Salesforce.com, Apple, Google, and others, giving its users access to their content in Box. – Reuters