On Wednesday, Citi maintained its Buy rating on Box, Inc. (NYSE:BOX) stock and increased the price target to $34 from $32. The firm recognized the company’s solid financial performance in the second quarter, highlighting an acceleration in forward-looking metrics.
These metrics include the Remaining Performance Obligations (RPO), which grew 14% on a constant currency (cc) basis from 8%, and billings, which saw a 9% increase on a cc basis from 5%.
The analyst from Citi noted that the macroeconomic environment remained largely stable, with particular strength observed in Japan and the public sector, including state, local, and education (SLED) segments.
Box’s artificial intelligence (AI) capabilities were credited for contributing to the improved execution in Suites and large deal closures, which saw an increase to 50 from 30 in the previous quarter.
Despite the positive developments, Citi pointed out some factors affecting the results, such as foreign exchange impacts, which contributed an additional $4 million, and early renewals adding $3 million. Most of the revenue increase was attributed to foreign exchange gains, totaling $10 million, with $2 million in constant currency.
The improved execution and the incremental contribution from AI were key reasons for Citi’s decision to raise the price target on Box shares. The new target is based on a 14x multiple of the company’s expected CY25 enterprise value to free cash flow (EV/FCF).
In other recent news, Box Inc. reported impressive second quarter results, surpassing analyst estimates with an adjusted earnings of $0.44 per share, compared to the projected $0.40. This was accompanied by a 3% year-over-year revenue increase to $270 million, slightly higher than the anticipated $269.5 million.
The company’s revenue growth accelerated to 6% on a constant currency basis, and it reported record non-GAAP gross margin of 81.6% and operating margin of 28.4% for the quarter.
Box also raised its full-year guidance, now expecting adjusted earnings of $1.64 to $1.66 per share on revenue of $1.086 billion to $1.09 billion, surpassing Wall Street forecasts. For the upcoming third quarter, the company predicts an adjusted EPS of $0.41 to $0.42 with revenue between $274 million and $276 million, also exceeding analyst expectations.
The company’s billings, a significant indicator of sales activity, rose 10% year-over-year to $256.4 million in the second quarter. Additionally, Box announced a $100 million expansion of its stock repurchase program, indicating confidence in its business model and growth prospects. These recent developments highlight Box’s solid performance and promising outlook.
InvestingPro Insights
As Box, Inc. (NYSE:BOX) continues to impress with its financial performance, real-time data from InvestingPro further reinforces the company’s standing in the market. With a market capitalization of approximately $4.18 billion, Box showcases its growth potential and financial stability. Notably, the company’s revenue growth over the last twelve months as of Q1 2025 stands at 4.6%, indicating a consistent upward trajectory in its earnings capabilities.
InvestingPro Tips highlight that Box has been trading at a high earnings multiple, with a P/E ratio of 38.95, suggesting investor confidence in its future growth prospects. Additionally, Box’s stock has shown strong returns over the last three months, with a price total return of 15.1%, reflecting positive market sentiment. These metrics are particularly relevant considering Citi’s recent price target increase, as they provide a broader context for the company’s valuation and momentum. For investors seeking more insights, there are additional InvestingPro Tips available, which delve into other aspects of Box’s financial health and market performance.
For those interested in a deeper analysis, Box’s profile on InvestingPro offers a comprehensive suite of tools and metrics, such as additional tips on the company’s share repurchase activities and debt levels, which can be found at https://www.investing.com/pro/BOX.
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