Box Inks Agreement With Starboard To Appoint New Directors

Box, Inc. (NYSE:BOX) recently entered into an agreement with Starboard Value LP (Starboard) to appoint three new independent directors to its board.

The company is expected to hold 2020 annual meeting of stockholders in June. Per the agreement, Box will add three new independent directors to its board before the annual meeting.

Among the three, Jack Lazar will join as the new director effective immediately. The second director will be selected from a list of candidates provided by Starboard, while the third director will be chosen by the board before the annual meeting.

Starboard is an investment firm that owns approximately 7.7% of Box’s outstanding shares.

Box also announced that two existing board members will not stand for re-election at the 2020 annual meeting. Following the meeting, the board will comprise 9 directors.

The company’s shares have lost 35.5%, underperforming the industry’s decline of 21.5% over the past year.

Box, Inc. Price and Consensus

Existing Business Scenario

Box continues to be a leader in the Enterprise Content Management and enterprise file synchronization and sharing spaces. Given effective management execution, new add-on products and impressive count of its Fortune 500 clients, the stock should do well in the near future.

Box should continue to benefit from partnerships with enterprise software companies and large public cloud providers, among others. The company’s partnerships with technology giants like Microsoft (NASDAQ:MSFT), Amazon (NASDAQ:AMZN), Facebook (NASDAQ:FB) and Google (NASDAQ:GOOGL) have increasingly been adding AI capacities to Box’s platform, thus aiding top-line growth. These partnerships should continue to be incremental to Box’s business. However, any change in partner dynamics could hurt its growth trajectory.

Increasing competition from Dropbox is a concern. Also, companies like Microsoft and Google are offering enhanced online storage services to expand their share. Nonetheless, Box’s retention rate should remain strong, driven by impressive seat growth in existing customers and strong attach rates of new products.

Zacks Rank & Other Stocks to Consider

Box currently carries a Zacks Rank #2 (Buy). Other top-ranked stocks in the broader technology sector include Stamps.com Inc. (NASDAQ:STMP) , eBay Inc. (NASDAQ:EBAY) and Atlassian Corp. (NASDAQ:TEAM) . While Stamps.com and eBay sport a Zacks Rank #1 (Strong Buy), Atlassian carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Long-term earnings growth for Stamps.com, Atlassian Corp. and eBay is currently projected at 15%, 22.3% and 11.3%, respectively.

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