1 AI Software Stock With 27% Upside Potential, According to Analysts

Box Inc. (BOX) is a cloud content service platform offering collaborative workflow and cloud-based storage systems to enterprises. Serving customers in retail, construction, life science, construction, government, media, healthcare, and more industries, Box works with more than 97,000 companies - including 68% of the Fortune 500. Started in 2005, the company operates in America, Europe, and the Asia-Pacific region, with headquarters located in California. 

Valued at a market cap of $4.03 billion, Box stock has gained 7% this year, with the upside largely driven by a surge after its 4Q results. 

What's Driving BOX? 

Specifically, Box shares gained 8.62% in a single session after posting its 4Q results back on March 5. The software company reported quarterly revenue of $262.9 million, in line with analysts’ expectations, while adjusted earnings of $0.42 per share beat the Street's estimates for $0.38 per share. On a full-year basis, the SaaS provider reported revenue of $1.04 billion, with earnings coming in at $0.67 per share. 

For the current quarter ending in April, Box said it expects earnings in the range of $0.35 to $0.36 per share, with revenue between $261 million and $263 million. For the full fiscal year, the company expects earnings in the range of $1.53 to $1.57 per share, on revenue of $1.08 billion to $1.09 billion. 

The earnings and revenue guidance came in a little lighter than analysts expected, which management attributed primarily to the impact of currency fluctuations. Roughly one-third of the company's revenue is generated overseas, and 60% of that is in Japanese yen - which recently made headlines for setting multi-decade lows against its foreign rivals.

However, investors overlooked the soft guidance and cheered news of a new integration with Microsoft (MSFT) Azure OpenAI, along with the launch of the new Box app for Apple (AAPL) Vision Pro.

“With advancements in AI, companies are accelerating their adoption of the cloud and transforming how they work with their content,” said CEO Aaron Levie in the earnings release. “Box is at the center of some of the most important trends in technology history as companies look to digitize and automate their businesses, accelerate innovation with the power of AI and protect their most important data.”

Notably, shares of Box also surged a few days before its quarterly release when the S&P Dow Jones Indices announced the company’s inclusion in the S&P SmallCap 600 Index($IQY) as of March 18. The stock gained 5% on the news, with the inclusion expected to attract mutual fund and ETF buying.

What's the Analyst Forecast for BOX Stock?

Analysts have a consensus “Moderate Buy” rating for the stock, with a mean price target of $31.10 - indicating a potential upside of 13.5% from current levels. Out of the total 11 analysts covering the stock, 8 have a “Strong Buy” rating, 1 has a “Moderate Buy” rating, 1 has a “Hold” rating, and the 1 remaining analyst has a “Strong Sell” rating. 

After earnings, Morgan Stanley analyst Josh Baer reiterated an “Overweight” rating for BOX stock, while raising its price target from $32 to $35. Separately, that same Street-high price target for Box was reiterated by Oppenheimer, where analyst George Iwanyc also rates the stock “Overweight.” That $35 price target implies expected upside of 27.7% from current levels.