Rosenblatt Starts Box, Inc. (BOX) at Buy
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Rosenblatt initiates coverage on Box, Inc. (NYSE: BOX) with a Buy rating and a price target of $25.00.
Analyst Marshall Senk commented, "We view Box as a potential disruptive force in the market for enterprise content management. This market today is dominated by legacy technology from vendors like Open Text (OTEX:NR), Microsoft (MSFT:NR) and IBM (IBM:NR) alongside file/sync (EFSS) solutions from vendors including Microsoft and Google (GOOGL:NR). Box has evolved its strategy over its life from EFSS toward enterprise content management – setting the stage by delivering a consumer grade user experience (like the EFSS vendors) backed by a cloud platform that tackles the enterprise requirements including collaboration, scale out and security. Significantly, the company has delivered a true extensible platform, enabling both third parties and customers to extend the platform to address specific markets and requirements. Early platform adopters include IBM and Twilio (TWLO:NR). We view the Box platform as the key to the long term success of the company – much as force.com has been for Salesforce (CRM:NR) – allowing the company to build an entire ecosystem that can drive incremental revenue."
He added, "We view the 2Q17 results (July) as a turning point for the company, coming off a disappointing Q1. Driven by the launch of several new product offerings, we saw an acceleration in billings growth, growth in both new customer adds and expansions and the emergence of IBM as a producing partner all driving the momentum shift. For Q3, we estimate revenue of $100 million, EPS of ($0.19). For 2017 we model revenue of $395 million (up 30%), EPS of ($0.69) and importantly, breakeven FCF in the fourth quarter. For F2018 we model revenue of $495 million, EPS of ($0.49), with operating margins improving from -22% to -12%."
Shares of Box, Inc. closed at $14.51 yesterday.
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