Dropbox (DBX), mcap=$7.4bn, price $20.17 vs $21.64

$DBX pitch:
– Dropbox – cloud storage solutions.
– A largely stale short report and sell rating from a leading bank has created an attractive contrarian setup.
– Growth is set to reaccelerate in 2H’22 on the back of recent 20% price increases.
– Successful execution of the pricing increase will also debunk the short thesis that cloud storage is a commodity product while $GOOG, $APPL, and $MSFT are giving it away for free.
– Consensus estimates are too low and remain below the mid-point of mgmt’s LT guidance. Several paths to push Dropbox back to double-digit revenue growth.

$DBX valuation:
– Set to achieve $574bn of FCFE in 2024.
– 25x multiple and 9% discount rate, results in $38/share price target today.

Exp. gain: +76% to $38.

Full DBX write-up (free guest account required):

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