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UBS cuts Box shares target, cites cautious billing growth forecast

EditorEmilio Ghigini
Published 05/29/2024, 06:10 AM

On Wednesday, UBS adjusted its price target for Box, Inc. (NYSE:BOX) shares to $31 from the previous $34 while sustaining a Buy rating on the company's stock.

The revision follows Box's first-quarter fiscal year 2025 report, which showed a revenue growth of 5% year-over-year, or 8% on a constant currency basis. Additionally, Box reported robust gross and operating margins of 80.2% and 26.6%, respectively.

Box's performance exceeded expectations, with the company delivering more upside results compared to previous quarters. The company's guidance for the second quarter of fiscal year 2025 includes revenue and operating margin projections that surpass both UBS and street estimates.

Furthermore, Box has increased its full-year fiscal 2025 revenue forecast by approximately $3 million on a constant currency basis, indicating an expected growth of around 7% year-over-year.Despite these positive indicators, there was a note of caution regarding Box's billing guidance for the full year.

While the billing figures were consistent with the first-quarter guidance, there is a shift in the full-year 2025 billing growth forecast to a new low-single digit from the previous estimate of approximately 4% year-over-year. UBS has prudently adjusted its billing growth projection to 3.8% from 4.8%.

The company's platform momentum remains strong, with an increased Suite attachment rate in deals over $100,000, reaching 85% compared to 81% in the previous quarter and 69% in the first quarter of fiscal year 2024.

Despite the lowered billing growth outlook, UBS believes the fundamentals of Box's business remain solid. The new price target of $31 is based on 15.9 times the estimated free cash flow for the calendar year 2025, as UBS reiterates its Buy rating on Box's shares.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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