It’s been a tumultuous couple of weeks for cloud storage stock Dropbox (NASDAQ:DBX). With layoffs and concerns about customer resiliency staring at it, its first-quarter results proved a welcome surprise. Sufficiently welcome, in fact, that Goldman Sachs analysts gave Dropbox a boost. That, in turn, was enough to prompt a very small bump in Dropbox’s share price at the time of writing.
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Goldman Sachs, by way of analyst Kash Rangan, hiked the rating on Dropbox from Sell to Hold, citing Dropbox’s first-quarter earnings report. Rangan also bolstered the price target, hiking it from $22 to $25 on the strength of improving earnings per share and average revenue per user figures, among other points. There are some other points that may drag on Dropbox later—Rangan points to things like “demand normalization” and “workforce reductions”—but Dropbox has been working to address those with better workflow and improved pricing.
Dropbox’s first quarter was sound enough. It brought in earnings of $0.42 per share, beating analyst estimates by $0.37. Revenue came in at $611.1 million, which was not only ahead of estimates as well, but was up 8.7% against this time last year. The earnings release came just after Dropbox announced plans to lay off 500 employees—roughly 16% of its workforce—and work to pivot to artificial intelligence in order to stay ahead of competitors.
Analysts throughout the spectrum are largely on Dropbox’s side. With four Buy ratings, two Holds, and one Sell, Dropbox stock is considered a Moderate Buy. Further, with an average price target of $25.80 per share, Dropbox stock also offers 20.79% upside potential.
