DropBox stock price is calm. Is it a buy ahead of earnings?

The DropBox (NASDAQ: DBX) stock price held steady on Thursday as investors waited for the company’s quarterly results scheduled for Thursday. The stock is trading at $24.90, where it has been in the past few days. 

DropBox earnings preview

DropBox is a leading technology company that offers cloud computing solutions to individuals and companies. Started in 2007, the company has become a major firm in its industry with a market capitalization of more than $9.5 billion. 

Are you looking for fast-news, hot-tips and market analysis?

Sign-up for the Invezz newsletter, today.

However, there are signs that the firm’s growth is slowing, which explains why the stock has dropped by over 24% from its highest level in 2021. The DropBox stock price has also underperformed as a public company considering that it has fallen by more than 20% from its IPO date. 

Analysts expect that DropBox revenue increased to $558 million in the fourth quarter from $550 million in Q3. It will also be an improvement from the $504 million that it made in the previous quarter. Judging by history, DropBox will likely beat its estimates considering that it has done that in all quarters since going public. 

Investors will look at several things in its results. First, they will look at the headline figures and see whether the company’s performance strengthened or worsened in Q4. Second, the market will focus on the forward guidance. Historically, DropBox tends to be highly conservative in providing its future guidance. 

Third, the DropBox stock price will react to the company’s business transition. In the past few years, the company has been attempting to target enterprise customers who are usually more stable and have less churn. Any signs of progress will help to push the share price higher. 

Analysts are generally optimistic about the DBX stock price. The median target for the stock is $33.60. Some of those who are optimistic about the company are Royal Bank of Canada, JMP Securities, and Jefferies. 

DropBox stock price forecast

The daily chart shows that the DBX stock price has been in a tight range in the past few weeks. It has remained between the key support and resistance levels at $22.53 and $22.53. It has also moved slightly above the 25-day and 50-day moving averages. 

Notably, the accumulation and distribution indicator has formed a bearish divergence pattern. Therefore, there is a likelihood that the stock will drop to the support at $22.53 when the company publishes its quarterly results.