- Credit Suisse analyst Rich Hilliker initiates coverage on Dropbox, Inc DBX with an Underperform rating and a price target of $20.
- Over nearly two decades, Dropbox has created a thoughtful, well-architected platform and amassed an impressive following with strong brand recognition.
- He appreciated what Dropbox has built profoundly and expects the company to remain visible in the content collaboration and services landscape.
- Yet he also questioned the company's ability to capture the future share of content workloads meaningfully as he saw significant measures and time to resolve its lackluster go-to-market rigor and product integration and add compelling platform depth.
- He believes Dropbox's intention and vision are much more mature than its level of integration, the sophistication of its go-to-market strategy, and suitable product packaging today.
- He avidly believes a company must spend to grow, and Dropbox's model confirms it.
- Accordingly, net new paid customer additions have moderated, and Dropbox's magic number and burn productivity have consistently declined, suggesting productivity is stalling.
- He believes the integration efforts of HelloSign and DocSend are in the early stages, with redundant systems, a fragmented sales force, and utterly distinct branding until October 2022.
- The analyst believes this is due, in part, to consistent leadership turnover, with nearly ten named senior executives departing the firm in the past four years.
- Finally, except for free cash flow, results have already achieved its 2024 guidance – suggesting only marginal investment to accelerate product innovation to combat feature commoditization, go-to-market improvements, and increase its platform power.
- Price Action: DBX shares traded lower by 0.78% at $22.22 on the last check Tuesday.
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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