Box (BOX): CEO Meeting Highlights Opportunity But No Upgrade Yet - Stifel
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Stifel analyst, Aaron Rakers, reiterated his Hold rating on shares of Box, Inc. (NYSE: BOX) but noted that a recent meeting with the CEO indicated an appreciating upsell potential. The analyst stated: "While we retain our Hold rating, our meetings leave us more positively biased on Box’s long-term story / positioning and the company’s discounted EV/sales multiple vs. SaaS peers".
The analyst noted 3 key growth drivers:
1) Enterprise Customer Expansion: Enterprises are looking to replace their legacy ECM platforms (e.g., OpenText/Documentum, SharePoint, etc.) with enterprise scalable cloud-based solutions. Box’s momentum in large deals should remain a focus – 45 deals +$100k deals in F2Q17 (8 driven by IBM); 5 deals +$500k.
2) International Expansion: ~17% of F2Q17 revenue; focus on ability to leverage expanding partnerships and Box Zones (available in May 2016) for data localization using IBM and Amazon cloud data centers.
3) Multi-Product Upsell: Box’s ability to drive upsell in its existing customer base – e.g., Governance (400+ customers vs. 200 exiting F2016), KeySafe (encryption key mgmt; important in financial services), Zones (international data location), Shuttle (faster content migration into cloud), and Relay (content workflows built in collaboration with IBM). Box’s sales force does not currently carry quota on these add-on solutions; we believe this will likely change in F2018 (C2017).
No change to the price target of $15.
Shares of Box, Inc. closed at $15.74 yesterday.
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