Revenue jumped 19% in the quarter, Dropbox boosted forecasts for its operating margin and free cash flow in 2020 and beyond, and the board authorized a $600 million stock buyback.
The estimate for operating margin now stands at 28% to 30%, which Dropbox expects to achieve by 2024, up from its initial estimate of 20% to 22% five months ago.
The increase in that forecast was “shocking,” especially because Dropbox issued its original target so recently, Bernstein Global Wealth Management analyst Zen Chrane wrote in a report, according to Bloomberg.
The timing and size of the change, along with the buyback authorization, “leads us to wonder if the company was under pressure from potential activists,” he said.
Chrane raised his price target for Dropbox shares to $19 from $18 and kept his underperform rating.
Deutsche Bank analysts lifted their share-price target to $30 from $28 and maintained their buy rating.
The earnings report represents a “potentially thesis-changing fourth-quarter print,” they wrote in a report, according to Bloomberg.
The company is “showing no evidence of a material churn uptick” after its price increase last year, the analysts said.
RBC Capital analysts also boosted their share-price target to $30 from $28. They affirmed their outperform rating.
Recent acquisitions, such as HelloSign and the strength of Dropbox’ Spaces feature will be “instrumental to sustaining growth,” they wrote in a report, according to Bloomberg.
At last check, Dropbox shares traded at $22, up 18%.