Dropbox recently went public with an IPO price of $21 per share, and a quick look at the trading chart for DBX will show you that the price has appreciated at a strong rate. However, until recently, some of the biggest investment banks on Wall Street legally had their hands tied behind their backs when it came to publicizing their opinions. However, enough time has passed and quiet periods have been lifted. Now, analysts that work for underwriters involved in the IPO are able to speak out, and they’re doing just that.
Overall, The Opinion Is Bullish
For the most part, analysts have a bullish opinion of Dropbox shares. During the IPO, 12 of the biggest investment banks on Wall Street acted as underwriters on the transaction. Of the 12 underwriters involved in the transaction, 7 have rated the stock a buy and 4 have rated the stock a hold, not one has rated the stock a sell yet.
While the ratings outline a relatively strong view from the largest investment banks on Wall Street, a look at the price target range shows that not all who have weighed in are very positive. At the moment, Dropbox is trading just pennies shy of $30 per share. However, the price target range on the stock goes from $30 at Macquarie (a firm that has given the stock the highest rating possible) to $40 at KeyBanc and Jaffray. While the high end of the price targets suggests that the stock could climb by more than 30%, those on the lowest end, even with overwhelmingly bullish ratings, only see potential for gains around three tenths of a percentage point!
One Analyst Is Warning Of The Risks
While most analysts have a pretty positive opinion of what to expect from Dropbox, there is one analysts that’s making waves and generating a debate. John DiFucci at Jefferies recently weighed in, giving the stock a “Hold” rating and a price target of $31, suggesting that the stock could inch up, but it may not be worth the risk.
In his view, Dropbox is unique for a company of its size and growth. However, DiFucci believes that the stock is already prices appropriately and doesn’t have much room for growth. His reasoning is relatively simple. The stock has appreciated in value by around 40% since the IPO launched. At the same time, the company is painfully far from generating a profit due to a high ratio of free to paying users and the competitive landscape is riddled with companies like IBM and Oracle, who could take a large market share moving forward.
Nonetheless, even DiFucci included a positive note in his analysis of the stock. In his report, DiFucci made a point to note that Dropbox is increasingly being adopted by business teams within enterprises. Nonetheless, he made it clear that the stock may not reach the high level of growth that the market seems to be expecting.
The Bulls Maintain Control… For Now
At the moment, the bulls are clearly in control of Dropbox, both from an investor standpoint and from an analyst standpoint. Of course, that makes sense considering the growth that we’ve seen since the IPO. However, if DiFucci is correct, the company could face competitive pressures, leading to potential hard times ahead.