Wall Street is in love with this $1.5 billion company - but its stock continues to sink

There's something bizarre going on with Box, the online storage company with a market cap around $1.5 billion: Wall Street analysts are glowing over its business, but its stock continues to crash, dropping as much as 14% Thursday morning.

The stock-price decline comes a day after Box reported another solid earnings, beating its revenue forecast and raising its full-year-revenue guidance. Billings jumped 38% to $89.4 million in the third quarter, while the company reiterated its goal of reaching cash-flow positive by the end of next fiscal year.

In fact, Pacific Crest wrote in a note on Thursday that Box is a "top pick for 2016," because of its strong revenue and billings growth, as well as an improvement in cash flow.

"We believe Box is compelling as a premium technology that could disrupt traditional spending on content management and collaboration ... BOX is a top pick for 2016, in our view. We remain buyers," it wrote.

Cannacord Genuity also wrote a positive note Thursday, saying it would "rather be early than late in being bullish on Box." It added Box's shares could soar as much as 30% as the company nears profitability.

Oppenheimer, too, echoed the same idea, writing, "We remain positive on Box's growth catalysts (channel build, Platform expansion, up-sell) and long-term operating leverage (scale and room to manage free user costs) and would continue to be buyers."

Yet, as of Thursday afternoon, Box shares are down more than 11%, dropping to $12.53 per share, way below its $14 IPO price.

One big reason for the chilling investor sentiment could do with Box's widening losses. Last quarter, its non-GAAP operating loss went up to $37.9 million from $34.2 million year-over-year, although as a percentage of total revenue, the portion shrunk to 48% of total revenue from 60%, respectively.

Box CEO Aaron Levie acknowledged in an interview with us Wednesday that there may be some investors who don't believe in Box's long-term investment strategy that will keep the company in the red for an extended period of time.

"Some investors are going to look at our losses and say we don't understand how that business gets profitable," he said.

But there's reason to remain upbeat if you're Box, according to another Pacific Crest note, which surveyed CIOs, the top decision makers for software purchases at big companies. It said cloud software, also known as software-as-a-service (SaaS), is one of the top priorities for many CIOs next year, indicating the shift to cloud software, like Box, is just getting started.

"CIOs identified SaaS as one of their top priorities for 2016. In fact, for CIOs with budgets over $1 billion, SaaS tied with security as the top priority. In past Pacific Crest CIO surveys, SaaS hasn't shown well because CIOs were not heavily involved with SaaS," it wrote.

The chart below shows the survey results, where cloud-SaaS is ranked as the one of the top priorities for CIOs next year: