KeyBanc Not Worried About DocuSign Billing 'Hiccup,' Guidance

DocuSign, Inc. DOCU shares were down Friday following disappointing guidance and tepid billings, but KeyBanc remained Overweight on the stock calling the results a “slight hiccup.”

The Analyst

KeyBanc’s Rob Owens kept an Overweight rating on DocuSign with a $65 price target.

The Thesis

DocuSign’s billing results were modest, despite another quarterly revenue beat, Owens said. He said that the lack of a net increase in forward guidance for the first time since the company went public would weigh on shares. And it did, with the stock off more than 13 percent on Friday.

But Owens was less nervous about the long-term ramifications.

“We view these as temporary setbacks and continue to believe in the long-term opportunity,” Owens wrote in a note.

As DocuSign and others in the industry move to the cloud, there was bound to be a minor disruption in sales cycles, he said.

And despite the hiccup, the quarter was strong for customer acquisition, large customers growth, and international expansion, he said. All of that supports “a more bullish fundamental story,” Owens wrote.

“There are little changes to our forward expectations, … we would use weakness as a buying opportunity for the leading e-signature player ahead of likely accelerating market adoption,” according to Owens.

Price Action

DocuSign stock was down 13.5 percent at $47.31 at publication time Friday.

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