Why Analysts Are Not Pumped About Box

For the IPO, Box originally priced its shares at $14, above the expected price range of $11 to $13. However, shares entered the market at $20.20. Based on the offering price, the company’s valuation rose above the $1.6 billion level, and Box raised $175 million on the 12.5 million shares it sold.

At the time of the IPO, investors appeared to be unconcerned with either the company’s growing losses or its ability to succeed in what many believe is a commodity market for cloud-based storage. For Box to live up to its triumph, it has to compete and win against big players like Microsoft Corp. (NASDAQ: MSFT) and Amazon.com Inc. (NASDAQ: AMZN) that have offered cloud-based storage for increasingly lower prices.

Since the IPO, share prices dwindled until last week, when they took a slight jump. Still, shares have not been at the IPO level since they entered the market. The stock has a post-IPO trading range of $16.41 to $24.73, with the high being the day of the IPO and the low about two weeks later.

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24/7 Wall St has collected some analyst reports on Box, and for the most part all appear to be in consensus, with the exception of Credit Suisse:

• Canaccord Genuity initiated coverage with a Hold rating and a $22 price target.
• Morgan Stanley initiated coverage with an Equal Weight rating and a $20 price target.
• Raymond James initiated coverage with a Market Perform rating.
• Credit Suisse initiated coverage with an Outperform rating and a $24 price target.
• Wells Fargo initiated coverage with a Market Perform rating.
• J.P. Morgan initiated coverage with a Neutral rating and a $22 price target.
• Pacific Crest initiated coverage with a Sector Perform rating.
• BMO Capital Markets initiated coverage with a Market Perform rating and a $20 price target.

In the second half of Tuesday’s trading session, shares of Box were down roughly 3.5% at $19.47.