DocuSign's First Public Earnings Report Reinforces Citi's Bullish Thesis

Docusign Inc DOCU reported a first-quarter top-and-bottom-line beat Thursday, reinforcing the company's long-term prospects, according to Citi.

The Analyst

Citi's Walter Pritchard maintains a Buy rating on DocuSign with a price target lifted from $59 to $70.

The Thesis

DocuSign's first-ever earnings report showed upside to Pritchard's estimates, including revenue of $155.8 million versus Citi's expectation of $146 million and billings of $168.9 million against the analyst's $134.3-million estimate.

Upside in the quarter was powered by a "wealth of sustainable drivers" that appear to be strong enough to believe management's revenue, billings and spending guidance for the full fiscal year is conservative, Pritchard said. 

DocuSign's Q1 print reaffirms a view that the company could become a category leader in the e-sign and online transaction services segment, which is still in its early stages, the analyst said. The stock's high multiple is warranted and on par with similar market leaders like salesforce.com, inc. CRM, he said. 

Citi's revised $70 price target is based on a 33x multiple on fiscal 2025 free cash flow to firm.

Price Action

Shares of Docusign were trading higher by 2.9 percent at the time of publication Friday. 

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