Box (BOX) could see stronger-than-guided growth in H2 as AI demand, Enterprise Advanced adoption and a healthy sales pipeline support revenue and billings, while margins should remain solid despite higher AI costs, UBS Securities said in a note Wednesday.
Box's guidance for 10% to 11% constant-currency revenue growth and 8% to 9% billings growth in H2 looks conservative, as AI is creating more demand from companies seeking better ways to manage, secure and control their data for AI tools and agents, the investment firm said.
AI use should continue to grow, helped by stronger adoption of Box Extract and other document-processing tools, while Enterprise Advanced remains the main source of AI-related sales, UBS added.
Gross margin could face pressure from higher AI usage and infrastructure costs, but pricing gains, separate AI usage charges and opex leverage should help Box maintain its 28% fiscal 2027 operating margin target, according to the note.
UBS raised its price target for Box to $37 from $29 while keeping its neutral rating, adding that improving billings, customer retention and accelerating cRPO support its view that recent business momentum can continue, though more proof that the trend is sustainable is needed.
Shares of Box were up 1.8% in Wednesday trading.
Price: $33.60, Change: $+0.60, Percent Change: +1.82%