It’s time for investors to load up on shares of cloud storage company Box , according to Morgan Stanley. Analyst Josh Baer upgraded shares of Box to overweight from equal weight, saying that the company can handle the content management needs of a post-Covid workforce. The analyst also hiked his price target on the stock to $34 per share from $32, implying upside of 39.1% from Friday’s close of $24.39. Box shares rose more than 3% in the premarket. “Solid relative macro positioning w/ compelling ROI and value in Box Suites, strong execution, a more favorable competitive landscape, and upside to margin expansion / ‘Rule of 40′ gives us confidence Box’s < 13x EV/FCF can partly close the +45% valuation gap vs. software peers,” Baer wrote in a Monday note. The analyst expects that the higher retention and lower churn numbers across Box’s product suite will be key to navigating a challenging backdrop, as they point to Box’s growing value for customers. Shares of Box are down nearly 7% this year. “[We] view customers’ increased focus on driving cost and ROI efficiencies [translates] to stronger positioning of Box’s broad content management platform, allowing them to better weather macro impacts and continue to execute through potential headwinds,” Baer wrote. “We believe this dynamic has already started to emerge midway through FY23, with the company beating consensus revenue and billings estimates by ~40 bps and ~470bps respectively in 2Q23, despite a -3% impact to revenue and -6% impact to billings resulting from FX headwinds amidst the macro tumult,” Baer added. —CNBC’s Michael Bloom contributed to this report.
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