Shares of DocuSign (DOCU 2.38%) have already climbed 250% over the past year, but will surge to near all-time highs over the coming 12 months.

That's according to Morgan Stanley analyst Stan Zlotsky. On Monday, Zlotsky upgraded DocuSign's stock to overweight (buy) from equal weight (hold), with a price target of $260. That represents potential gains of nearly 20% over the stock's closing price on Friday of about $218. 

Woman on a laptop using DocuSign.

Image source: DocuSign.

Zlotsky pointed to a recent pullback for the digital-signature and contract-management platform, which dropped 28% from recent highs following a general decline in technology stocks, creating an attractive entry point for investors.

Only a small percentage of stocks have actually benefited from the pandemic, and DocuSign is clearly one of them. Consumers are loath to participate in face-to-face meetings unless absolutely necessary, and customers are unlikely to return to the manual signing process once they try DocuSign's electronic signature solutions.

Zlotsky believes this trend will continue. "Strong fundamentals coupled with more durable COVID-19 tailwinds make the DocuSign story more compelling than ever," he wrote in a note to clients.

Will DocuSign's stock price hit $260?

The evidence suggests that Zlotsky is right on the money. Revenue growth accelerated to 45% year over year in the second quarter, after generating 39% growth in Q1. DocuSign already controls about 70% of the e-signature market, and the pandemic has generated healthy tailwinds for all things digital.

As the adoption of online document signing and contract management gains steam, DocuSign's revenue could continue to rise sharply as the company draws more customers into its ecosystem. This suggests that the demand for its services will only increase, so the potential for its shares to hit $260 in the coming year is not only plausible, but seems likely -- and it could happen even sooner than many investors expect.