Dropbox Analysts Scour for More Upside as Initiations Loom

(Bloomberg) -- Dropbox Inc. analysts may be hard-pressed to spot further upside after the stock’s dramatic rise from last month’s listing price. But roughly one dozen sell-side firms may try with initiations this week.

Shares in the file-sharing company have risen 38 percent from the March 22 initial public offering. The Nasdaq Computer Index has risen 0.8 percent over that time.

On April 17, a quiet period expires for perhaps the most amicable analysts on Wall Street: those working at banks that underwrote Dropbox’s IPO. The expiration will probably prompt initiations from lead underwriters Goldman Sachs Group Inc. and JPMorgan Chase & Co., plus other members of the syndicate, such as Deutsche Bank AG, Allen & Co., Bank of America Corp., Royal Bank of Canada, Jefferies Group LLC, Macquarie, Canaccord Genuity Group Inc., JMP Group LLC, KeyBanc Capital Markets Inc. and Piper Jaffray Cos.

Without support from underwriting banks, Dropbox currently has two sell ratings and one buy rating, according to Bloomberg data. On April 12, Nomura Instinet analyst Christopher Eberle gave the stock a street-low $21 price target, equal to the IPO price.

"Given DBX’s consistently low penetration rates, extremely low conversion rates, and lack of enterprise salesforce, we think there is little room for upside potential and, likely, significant downside if these trends do not improve," he wrote.

--With assistance from Jeran Wittenstein

To contact the reporter on this story: Drew Singer in New York at dsinger28@bloomberg.net.

To contact the editors responsible for this story: Arie Shapira at ashapira3@bloomberg.net, Morwenna Coniam

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