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Dropbox (DBX) Surges 6.3%: Is This an Indication of Further Gains?

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Dropbox (DBX - Free Report) shares rallied 6.3% in the last trading session to close at $27.06. This move can be attributable to notable volume with a higher number of shares being traded than in a typical session. This compares to the stock's 7.4% gain over the past four weeks.

The increase in share price can be attributed to the purchase of Dropbox shares worth $2.46 million by one of the company’s directors named Robert Mylod.

Dropbox also recently announced its intent to buyout DocSend in all cash deal worth $165 million. Dropbox is looking to expand its digital solutions’ portfolio to assist enterprises manage important business-related documents amid remote work trend with the latest buyout.

Apart from that, Dropbox’s focus on product innovation and addition of new features like Dropbox Vault, Dropbox Passwords, Dropbox Backup and Dropbox Spaces is anticipated to improve revenue opportunities for the company.

Also, momentum witnessed for HelloSign bodes well for the company’s growth prospects in the long run. HelloSign is Dropbox’s e-signature tool.

Price and Consensus

Price Consensus Chart for Dropbox

This online file-sharing company is expected to post quarterly earnings of $0.30 per share in its upcoming report, which represents a year-over-year change of +76.5%. Revenues are expected to be $505.01 million, up 11% from the year-ago quarter.

Earnings and revenue growth expectations certainly give a good sense of the potential strength in a stock, but empirical research shows that trends in earnings estimate revisions are strongly correlated with near-term stock price movements.

For Dropbox, the consensus EPS estimate for the quarter has been revised 205% higher over the last 30 days to the current level. And a positive trend in earnings estimate revision usually translates into price appreciation. So, make sure to keep an eye on DBX going forward to see if this recent jump can turn into more strength down the road.

The stock currently carries a Zacks Rank 2 (Buy). You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>


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