Analyst Note| Malik Ahmed Khan |
We are maintaining our fair value estimate for Box of $30 after the company posted its fourth-quarter earnings. Although Box has achieved gross margin expansion and upselling success, the firm still faces an uphill battle converting companies from legacy ecosystems that carry high switching costs. While we do not think Box has an economic moat, the company continues to see stickiness from its multiproduct sales strategy – exemplified by a 111% net retention rate, up from 102% year over year. With the share price up 5% after hours, we think Box is fairly valued.