Box Analysts Already Looking Ahead to 'Pivotal' 4Q

(Bloomberg) -- Box Inc. fell as much as 6.1 percent on Thursday, a day after it reported third-quarter revenue that topped expectations and projected fourth-quarter revenue that fell short of the estimate at the midpoint. Analysts were modestly positive on the results, but maintained skepticism about the company’s fourth quarter, which they view as a "pivotal" period.

Here’s what analysts are saying:

Morgan Stanley (Melissa Franchi)

“BOX’s relatively in-line Q3 is likely good enough, with low 20s current billings growth and bullish metrics on upsells and large deals.”

Keeps equal-weight rating and $21 price target, but trims free-cash-flow estimates for company’s 2020 fiscal year “given a lower margin guide.” Adds that the fourth-quarter billings acceleration “still holds some risk.”

Raymond James (Brian Peterson)

Results “showed encouraging progress across almost all key metrics, including ramping large deal activity... and upside to billings/revenue.”

Trims PT to $23 from $25, writing that “while management still referenced the possibility for growth to reaccelerate in FY20, we sense that this dynamic still remains dependent on large deal execution in F4Q19.”

Keeps outperform rating. “While shares may be range bound ahead of a pivotal F4Q print and FY20 outlook, we see limited downside at current levels, and believe the risk/reward remains quite favorable.”

Wells Fargo (Philip Winslow)

“We continue to expect a reacceleration in year-over-year billings growth in FQ4 and FY2020 as the disruptive forces from Box’s go-to market changes subside and Box’s improves the cross-sell and up-sell of add-on functions.”

Slightly lifts 2019 revenue forecast, keeps outperform rating and $30 PT.

Bloomberg Intelligence (Mandeep Singh)

Gross margins “may remain under pressure amid data-center investments and possible pricing pressure from large peers.” Company “will likely try to offset margin pressure by curtailing its sales and marketing spending, which may be a drag on sales growth amid a longer sales cycle for its products.”

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