What to Expect from This Struggling Cloud Stock

Can Dropbox stock make it back up to its previous highs?

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Dropbox Inc (NASDAQ:DBX) is down 0.9% to trade at $22.56 at last check. The cloud software name has shed 26.7% over the past nine months, recently losing steam at the $24.50 level, as it attempted another bounce off a Feb. 24, annual low of $19.90. If this price action holds, the security will extend its losing streak for a third consecutive day.

Analysts are optimistic towards DBX, with five of the seven in coverage calling it a "buy" or better, while the 12-month consensus target price of  $33 level is a 46.4% premium to the equity's current perch. Meanwhile, short interest fell 13% in the most recent reporting period, but still makes up 5.2% of the stock's available float.

DBX Intraday

The options pits lean pessimistic towards Dropbox stock. At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), DBX's 10-day put/call volume ratio of 1.33 stands higher all readings from the past 12 months. This means puts have been getting picked up at much faster-than-usual clip.

The cloud software company has grown its revenues 13%, and increased net income by $592 million since 2020, marking a shift into profitability with $335.8 million generated on the bottom line for 2021. Dropbox is also estimated to grow earnings 15%, and revenues 7.8% over the next year.

From a fundamental point of view, Dropbox stock offers a mixed valuation. DBX trades at a decent forward price-earnings ratio of 16.42, and a relatively high price-sales ratio of 4.43. 

Overall, Dropbox stock  inspires very little as a growth play, but offers enough for value investors to consider adding DBX to their portfolios, in hopes that the software concern will return to its previous highs.

 

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