Dropbox Inc. (NASDAQ: DBX) released its Q4 2021 and full year 2021 results on Thursday, February 18, 2022, in which the company topped earnings estimates.
What to look for: The cloud storage firm topped Wall Street estimates in Q4 2021, but that didn't prevent the stock from dropping slightly in extended trading. However, the company's CEO, Drew Houston, stated that they had a strong year, and they are proud of the progress they have made in changing its primary offering while expanding its product portfolio. In recent times the company has been focusing gin improving its offerings and adding analytics tools enabling users to track sharing of files in an organization.
Earnings: Stockearning’s Estimated EPS for the fourth quarter was pegged at $0.37 per share, but the company reported earnings of $0.41 per share, an earnings surprise of 10.81. A year ago, the company had earnings per share of $0.28. In the previous quarter, the online file-sharing company produced an earnings surprise of 5.71%, with earnings of $0.37 per share. Historical EPS performance indicates that the company has in the past 12 quarters has beat estimates 14 times (93%) and missed once (6%).
Revenue: Revenue was up 12% YoY to $565.5 million, beating estimates of $557.7 million. A year ago, the company reported revenue of $504.1 million. The company reported a net income of $335.8 million on sales of $2.16 billion for the full year, topping analysts estimates of $2 billion on sales.
Stock movement: Dropbox shares have dropped 19.7% since its third-quarter earnings. Interestingly, the company's shares have been DOWN 10 times out of the past 15 quarters following the earnings release. So, the historical price reaction suggests a 66% probability of the share price going DOWN following the fiscal Q4 2021 earnings release. According to the Stockearning algorithm, the predicted volatility on the first day is +/-6%, while the predicted volatility on the seventh day is +/-7%.
What analysts are saying: Berenberg analyst Edward Magi commenced coverage in Dropbox with a Hold rating and a price target of $25. Magi told investors in a research note that the company has capitalized on the offering of free-tier subscriptions to encourage platform use, but competition seems to be intense making way for significant pricing pressures.
Jefferies analyst Brent Thill raised Dropbox’s price target from $38 to $40 and maintained a Buy rating in the stock after its second-quarter results that beat across the board and the company issuing guidance above Wall Street's estimates in margins and revenue. Thill told investors that he believed that the company’s revised revenue growth guidance for FY 2021 was still conservative.
RBC Capital analyst Rishi Jaluria commenced coverage in DBX with a Buy rating and raised the price target on the stock from $28 to $35. Jaluria stated that he prefers DBX because of its market leadership position, margin expansion, reasonable valuation and differentiated strategy. However, the analyst told investors that he feels that a more in-line multiple is necessary considering the company's leadership position in the market and margin growth prospects.
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