This morning, stocks ticked upward after Pfizer (PFE) and BioNTech (BNTX) confirmed their vaccine’s effectiveness against the current viral mutation of concern. Studies proved that three doses of the vaccine were effective at neutralizing the variant. All sectors were positive, with tech leading this morning as stocks seemed ready to continue yesterday’s rally.
Barring the past two days, the market has been tough on richly valued high-growth stocks lately. Today’s stock pick features a mid-cap tech name that was dragged down along the way. The thing is, the stock wasn’t overvalued, to begin with. Now it looks like an outright steal.
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The development and expansion of the public cloud has been one of the major driving forces for tech over the past five years. It has been well documented how the rise of the public cloud has impacted the mega-cap names. The platforms that those companies have created have enabled a new generation of software companies to come up around them.
One of the promising mid-cap tech names we’re currently watching is Dropbox Inc (DBX). The company offers users a platform to store and share files, photos, videos, audio files, and documents. Increasing demand for cloud storage, triggered by the coronavirus crisis imposed work-from-home wave, has been acting as a tailwind DBX. Further, integration with leading apps like Zoom Video, Slack, and Atlassian are likely to expand the Dropbox paying user base over the long run.
DBX has fallen 23% in the past 3 months, which has knocked the price back into value range. The current share price indicates a market cap of around $9.3 billion. Based on FY22 estimates, the stock is trading at just 11.4x free cash flow. Dropbox is undervalued compared to market peers considering it yielded just under 8% of free cash flow for FY21. The S&P 500 only generates free cash flow of less than 3%.
Of 11 analysts offering recommendations for the stock, 6 rate it a Buy, 4 rate it a Hold, and two rate it a Sell. A median 12-month consensus price target of $38.00 represents a 54% increase from its current level.
Where to invest $1,000 right now...
Before you consider buying Dropbox, you'll want to see this.
Investing legend, Keith Kohl just revealed his #1 stock for 2022...
And it's not Dropbox.
Jeff Bezos, Peter Thiel, and the Rockefellers are betting a colossal nine figures on this tiny company that trades publicly for $5.
Keith say’s he thinks investors will be able to turn a small $50 stake into $150,000.
Find that to be extraordinary?
But you have to act now, because a catalyst coming in a few weeks is set to take this company mainstream... And by then, it could be too late.
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