Morgan Stanley Says A Good Q4 For Box 'Might Not Be Good Enough'

In a report published Thursday, Morgan Stanley analyst Keith Weiss commented that Box Inc's (NYSE: BOX) fourth quarter print showed progress in several areas, but 33 percent billings growth doesn't meet expectations for its first quarter post-IPO.

Weiss noted that the company's 45,000 customer base (including half of the Fortune 500 companies) along with its 59 deals over $100,000 (up from 41 a year ago) and less than 5 percent churn demonstrated "progress towards increased enterprise adoption" but the billings growth "underwhelms."

Looking ahead, Box sees incremental growth opportunities around security functionality, increased verticalization and new experiences for end users. However, the company also noted it will ramp up investments in S&M and R&D in fiscal 2016.

As a result, the analyst stated that he will "remain on the sidelines as we look for more comfort on the sustainability of growth and the path towards positive free cash flow."

Shares are Equal-weight rated with a $20 price target.