Box An 'Attractive Takeout Candidate' For Microsoft, Google, IBM, Cisco & Other Vendors

In a report published Tuesday, Oppenheimer analyst Ittai Kidron initiated coverage of Box Inc (NYSE: BOX) with a Perform rating. The analyst believes that the company has the potential to be an attractive M&A candidate.

"The company has grown quickly, benefiting from favorable trends such as workforce mobility, BYOD, and the adoption of cloud-based storage. With a large and growing addressable market and an effective land-and-expand business model that's driving strong customer retention and upsell opportunities, we see more growth ahead," Kidron stated.

The analyst believes that the company's TAM could grow to over $14 billion by 2019, with expansion into complementary markets. The company's "land-and-expand" model has already driven robust user growth, although its customer base penetration is still low. In addition, Box has been able to hold on to its enterprise user ASP premium, despite intense competition.

The analyst believes that the company would be an "attractive takeout candidate" for Microsoft Corporation (NASDAQ: MSFT), Google, Inc. (NASDAQ: GOOG), International Business Machines Corp. (NYSE: IBM) and Cisco Systems, Inc. (NASDAQ: CSCO), since Box can "enhance their competitive position or extend their existing collaboration efforts."

"Several of these vendors already partner with Box, validating its leading security and collaborative elements," Kidron added.