DBX - Dropbox rises as Goldman Sachs upgrades after strong Q1
2023-05-08 07:29:58 ET
Dropbox ( NASDAQ: DBX ) shares rose more than 1% in pre-market trading on Monday after Goldman Sachs upgraded the storage company after it reported first-quarter results last week.
Analyst Kash Rangan raised his rating on Dropbox ( DBX ) shares to neutral from sell and boosted his per-share price target to $25 from $22, citing strength in the company's average revenue per user, operating margin and earnings per share metrics.
"Though demand normalization post-pandemic and workforce reductions pose headwinds to user growth, Dropbox is leaning into pricing incentives and improved user workflows to stabilize retention and drive ARPU," Rangan wrote in an investor note. "These efforts are resonating as ARPU grew 3% sequentially in [first-quarter], a magnitude of growth not seen since [the first-quarter of 2021]."
During the first-quarter, Dropbox ( DBX ) said it earned an adjusted 42 cents per share on $611.1M, topping estimates of 36 cents per share and $601M in sales.
It ended the period with 17.9M paying users, up from 17.09M in the year-ago period and average revenue per user rose to $138.97 from $134.63 in the same period last year.
Looking ahead, Dropbox ( DBX ) expects second-quarter sales to be between $612M and $615M, with the consensus estimate at $613.5M. The company also tweaked its full-year outlook, as it now expects sales to be between $2.47B and $2.485B, down from a prior range of $2.475B to $2.49B.
Rangan also noted that Dropbox ( DBX ) is reallocating resources towards artificial intelligence, which he believes is "favorably positioned" to introduce new features and further strengthen its position as a category leader in content collaboration.
Analysts are largely bullish on Dropbox ( DBX ). It has a BUY rating from Seeking Alpha authors , while Wall Street analysts rate it a BUY . Conversely, Seeking Alpha's quant system, which consistently beats the market, rates DBX a HOLD .
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Dropbox rises as Goldman Sachs upgrades after strong Q1