Box (Ticker Symbol: BOX) reported earnings this week that initially sent the stock lower by 10%. The cloud storage company reported a slight earnings per share beat of a loss of .05 cents per share vs. Wall Street analysts’ expectations of a loss of .06 cents per share. Box’s net revenue did beat Wall Street’s expectations, reporting a revenue of $148.2 million vs. analysts’ estimates of $146.5 million. The company reported slower billings growth so far for the year which is adding uncertainty to earnings for the second half of the year. However, Box did update its guidance for the year and is now expecting a loss of .16 -.18 cents per share and revenue between $606-$608 million. The new forecasted numbers are right in line with what Wall Street analysts are looking for which is expectations of a loss of .18 cents per share and revenue of $606.5 million.
Box has been focusing on increasing the amount of revenue that it can generate from its customers. Executives within the company have stated that they would like to accomplish a $1 billion revenue run rate by the second half of its 2021 fiscal year. Dylan Smith, the Chief Executive Officer, stated that he is not going to specify what particular quarter is forecasted to pass that threshold. The company now has more than 87,000 customers that use its cloud storage capabilities, that number is up from 85,000 last quarter.
Box had its Initial Public Offering on January 19th, 2015 with an opening price of $20.20. The stock broke below that price on the second day of trading and proceeded to head lower over the next four quarters, before finding support just above the $8.50 price level. Box put in an all-time low of $8.81 in the first quarter of 2016. In the first quarter of 2016, the stock bottomed, forming a bullish divergence pattern, as indicated on the chart by the purple squares, where the stock makes a lower low in price but the Relative Strength Index makes a higher low. Traders and investors sometimes look at divergences for a possible pause within the current trend which can, at times, lead to a reversal as occurred in Box’s case. The stock proceeded to break through its downtrend and reclaim the 50-week Moving Average. Box continued to rally for 9 consecutive quarters, making over a 150% move higher, and trading to an all-time high of $29.79 on June 18th, 2018. Since then, the stock has sold off nearly 50% but is finding some price support around the $16.00 price level.
(Chart above courtesy of www.tipranks.com)
Based on a survey of 10 analysts offering 12-month price targets, the average price target for Box’s stock is $20.56. According to that number, the stock is priced at a discount relative to Wall Street’s analysts and could be considered undervalued around current levels near $18.27.
Earlier this year, rival software company Dropbox, (Ticker Symbol: DBX) began trading on the Nasdaq. Cloud storage companies are having incredible demand right now across the globe, as consumers switch to cloud storage for the majority of their work and personal things. Investors in the cloud storage space should look to Box’s next earnings report on August 18th for fresh news within the company.