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DropBox Technical Analysis

NASDAQ:DBX   DROPBOX INC
Prices are moving in a sideways trend.
If the resistance at 23 USD will be broken, it might be seen as a buy signal, otherwise the idea is to sell and let the prices move in the channel formed between the resistance of 23 usd and the support of 20.50

Fundamental News
Meeting the needs of a very large market, Dropbox (NASDAQ:DBX) offers cloud storage, team collaboration and work productivity solutions. After hosting a conference call with its SVP of Engineer, Product and Design Timothy Young, one analyst is even more optimistic about DBX’s long-term growth prospects.

Five-star analyst Alex Zukin, of RBC Capital, tells clients he sees “solid potential for the company’s new product strategy, which essentially aims to be a knowledge worker’s central engagement hub.” The platform allows employees to communicate and collaborate using DBX’s own products, integrated applications and other content including URLs and various types of files.

According to Young, technology across various consumer goods is transitioning from an “ownership model” to an “access model”, with the cloud enabling this shift to happen in the workplace as well. As a result, this prompted DBX to revamp its product and strategy. Going beyond managing files, the company is now “in the business of managing asynchronous communications across mediums and even other applications.”

Zukin explained, “We note that Dropbox is not the only vendor trying to serve this need, but Dropbox does view its role here as unique, nothing that while companies like Zoom and Slack are greater for short conversations and exchanges, Dropbox is trying to provide institutional long-term memory.”

As part of this updated strategy, DBX has placed a significant focus on shifting it from an OS/utility layer to a foreground application. “The company highlighted not only its new desktop app, but also tray and menu bars that bring contextual awareness to the knowledge workers and an ability to bring in new aggregation points around access,” Zukin commented. Adding to the good news, management stated its user base is incredibly loyal and has reacted positively to the product changes.

Everything that DBX has going for it keeps Zukin with the bulls. To this end, he maintained an Outperform rating and $30 price target. The implication? Upside potential of 39%.

Looking at the consensus breakdown, 5 Buys, 1 Hold and 2 Sells have been assigned in the last three months. So, DBX gets a Moderate Buy consensus rating. At $26.43, the average price target indicates 23% upside potential.

Comments

Picked up a decent size position at todays close. Hit support level and am expecting a strong bounce upward to continue the trend. Don't see why It would not break out above 23 in the near future.
Reply
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