William Blair Upgrades Dropbox (DBX) to Market Perform

William Blair analyst Jason Ader upgraded Dropbox (NASDAQ: DBX) from Underperform to Market Perform.

The analyst comments: “We are upgrading Dropbox shares to Market Perform from Underperform following solid second-quarter results. Our upgrade rationale is based on: 1) growing confidence that Dropbox’s core FSS business is beginning to reaccelerate under new leadership, with paying-user growth, improving Teams trends, and stronger customer lifecycle metrics supporting modest revenue growth going forward; 2) strong profitability and free cash flow, with 2026 guidance now implying over 40% non-GAAP operating margin and over $1 billion of unlevered free cash flow (43% margin); 3) limited downside risk at an enterprise-value-to-free-cash-flow multiple of 8.5 times our 2027 estimates; and 4) the underappreciated prospect that Dropbox could monetize its large-scale storage infrastructure and content platform by selling excess capacity to AI providers (similar to Backblaze’s [BLZE $18.11; Market Perform] recent deal with CoreWeave [CRWV $85.33]) and/or partnering with AI-native companies that want to leverage Dropbox’s expertise in files, workflows, permissions, governance, and large-scale object storage. We think the arrival of co-CEO Ashraf Alkarmi increases the probability that Dropbox could pursue this monetization strategy and unlock value from its core competencies in data infrastructure and management.”

For an analyst ratings summary and ratings history on Dropbox click here. For more ratings news on Dropbox click here.

Shares of Dropbox closed at $34.54 yesterday.

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