Why KeyBanc Is More Bullish On Box Than Dropbox

In separate notes, KeyBanc Capital Markets initiated coverage of collaboration technology leader Dropbox Inc DBX and cloud content leader Box Inc BOX.

The Tech Analyst: Steve Enders initiated coverage of Dropbox with a Sector Weight rating and started coverage of Box with an Overweight rating and $22 price target. 

The Tech Thesis: Although Dropbox enjoys brand recognition and has a global base of more than 600 million users, the company’s Collaboration Workspace platform is still in the early stages and “not yet a catalyst to growth,” Enders said in an initiation note.

Dropbox’s growth has considerably slowed, with stiffening competition that increasingly uses bundling, the analyst said.

The company had guided to 12% year-on-year growth for the fourth quarter of 2020 versus 31% growth in 2017, with a slowdown in paid user conversion, he said. 

In a separate initiation note, Enders said Box has made itself a leader in the content services platform market, which he said has a $6-billion total addressable market and is still early in its cloud shift. 

“Recent investments in Governance, Security, and Workflow Automation add-ons are driving an evolution of Box’s platform that is becoming more competitive in Content Management deals moving to the cloud with streamlined Suites sales,” Enders said. 

BOX, DBX Price Action: Shares of Dropbox were down 2.18% at $22.20 at last check, while Box shares were up 0.56% at $18.10.