Box's Billings Bounce Back In Q2

A day after Box Inc (NYSE: BOX) delivered better-than-expected results and increased its full-year outlook, Oppenheimer maintains its Outperform rating and $18 price target on the company's shares. Analysts Ittai Kidron George Iwanyc believe there are multiple positives in favor of the stock.

The brokerage expects Box to provide more lights on the fresh products, long-term opportunity and overall model in next week's analyst day. The lead analyst pointed out that billings bounced back in the second quarter and was encouraged by momentum in big-deal and progress on widening the portfolio.

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In a research note to clients, the leader analyst commented, "Box delivered a solid quarter, showing improved leverage, improved billings, good traction with IBM and larger deals, and progress with newer products. Overall, we're encouraged and remain comfortable with our thesis. We're raising estimates slightly reflecting results/guidance, with a positive view on FY18 when we expect a bigger impact from IBM, Platform, and newer products."

The brokerage listed positives like the 32 percent year-over-year growth in customer additions, 45 deals of over $100,000 and five deals of more than $500,000 in the second quarter. In comparison, the company recorded 31 deals of more than $100,000 and four deals of over $500,000 in the year-ago period. Aside from that, the analysts noted the 115 percent retention rate, healthy net expansion of 19 percent and low churn rate of 3 percent.

On the flip side, the analysts pointed out modest drop in revenue per customer, execution risk on fresh product traction and acceptance, gross margin pull back and BoxWorks event costs.

At time of publication, Box shares were up 1.67 percent on the day at $13.97 with about 10 minutes left in regular trading.

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