What happened
Shares of DocuSign (DOCU +1.21%) were climbing again on Monday morning, adding as much as 5.2%. As of 3:24 p.m. ET, the stock was up 2%.
After DocuSign delivered better-than-expected earnings results late last week, analysts are updating their models and are moderately more bullish on the e-signature and technology company.
NASDAQ: DOCU
Key Data Points
So what
No fewer than three of Wall Street's finest put pencil to paper and increased their expectations on DocuSign.
J.P. Morgan analyst Mark Murphy upgraded DocuSign to neutral (hold) from underweight (sell) with a price target of $65, according to The Fly. The price target was barely above the stock's closing price on Friday. While that might not seem particularly bullish, what Murphy wrote in a note to clients was revealing. The analyst identified DocuSign as a "category-leading" e-signature provider that has also brought focus to the contract lifecycle management (CLM) space. Murphy cited the company's "deep competitive moat" provided by its flagship digital signature offering. On the other hand, the analyst noted the pressure on near-term billings as the company "struggles to find a sustainable growth trajectory."
Baird analyst William Power raised his price target on DocuSign to $70 from $60 and maintained a neutral (hold) rating on the shares. This represents potential gains for investors of 9% compared to Friday's close. The analyst said that while DocuSign's outlook was mixed, he views the increase in both full-year subscription revenue and billings guidance as a net positive for investors. Power also cited the recent management changes as better positioning the company for the future.
Finally, Wedbush analyst Daniel Ives raised his price target on DocuSign to $55 from $50, but maintained an underperform (sell) rating on the shares -- suggesting the stock could have further to fall. While he acknowledged the "impressive" quarterly results, he remains unconvinced the company can maintain that momentum, particularly given the challenges to the economy.
Now what
For its fiscal 2023 second quarter, DocuSign delivered revenue that grew 22%, while forward-looking billings grew just 9%. At the same time, DocuSign maintained its full-year guidance, which calls for revenue growth of roughly 18%.
Short-term headwinds aside, DocuSign revolutionized the e-signature market and it's doing the same for CLM. For those with time to wait for its inevitable recovery, DocuSign stock is a buy.
