RBC Capital analyst Rishi Jaluria has maintained an Underperform rating for Box Inc. (BOX), despite the company’s strong second-quarter results. While Box exceeded revenue and earnings estimates, Jaluria remains cautious due to several factors.
Box reported second-quarter revenue of $270.04 million, surpassing the analyst consensus estimate of $269.18 million. Adjusted EPS came in at $0.44, exceeding the anticipated $0.40.
Looking ahead, Box anticipates third-quarter revenue between $274.00 and $276.00 million, compared to the $270.97 million estimate. Adjusted EPS is projected to be between $0.41 and $0.42, exceeding the $0.39 estimate.
For the fiscal year 2025, Box expects revenue in the range of $1.086 billion to $1.090 billion, versus the $1.079 billion estimate. Adjusted EPS is expected to be between $1.64 and $1.66, exceeding the $1.57 estimate.
Jaluria noted that while second-quarter revenue was roughly in line with expectations, billings performed better, benefiting from early renewals. He also stated that macro conditions remain stable.
Fiscal 2025 revenue and billings guidance increased on a constant currency basis, while margins remained relatively unchanged according to Jaluria’s estimate. He also highlighted an improvement in the Net Revenue Retention (NRR) rate, driven by higher effective pricing as AI features drive higher-tier upgrades.
Despite the positive aspects, Jaluria’s price target of $21 reflects an 11x Enterprise Value/Free Cash Flow multiple based on his calendar 2025 estimate of $336 million. This target multiple is discounted compared to the peer group, which Jaluria attributes to the risk of commodification, competition, international slowdown, and Box’s execution track record.
Jaluria projects third-quarter revenue of $275 million and adjusted EPS of $0.41. For fiscal 2025, he anticipates revenue of $1.088 billion and adjusted EPS of $1.64.
Following the news, BOX stock traded higher by 9.65% at $31.60 at the last check on Wednesday.
