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DocuSign Delivers Big Beat And Raise On COVID-Related Momentum, BofA Says

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DocuSign Inc (NASDAQ: DOCU) has been a strong beneficiary of COVID-19 and the effects could last in the longer term, according to BofA Securities.

The DocuSign Analyst: Kash Rangan maintained a Neutral rating for DocuSign, while raising the price target from $165 to $300.

The DocuSign Thesis: The company delivered a convincing second-quarter beat across the board, driven by continued acceleration in e-signature adoption and a spike in dollar-based net expansion (DBNE) rate to 120%, Rangan said in the note.

He noted that DocuSign’s 61% billings growth was particularly impressive, which represents a sequential acceleration from the previous quarter’s 59%, despite tougher comps.

The company’s subscription revenue grew by 47%, representing the biggest estimate beat in history. What is even more impressive is that DocuSign’s achieved this along with record operating margins and free cash flows, Rangan noted.

Management raised the revenue and billings guidance for fiscal 2021 from $1.32 billion to $1.39 billion and from $1.53 billion to $1.63 billion, respectively.

“The acquisition of LiveOak tech, which facilitates remote transactions through video conferencing, and the upcoming launch of DOCU Notary should strengthen the portfolio and add to growth opportunities later this year,” the analyst wrote.

DOCU Price Action: Shares of DocuSign was trading sharply lower by 12% at $212.54 at the time of publication Friday.

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DocuSign Reports Q2 Earnings Beat, Subscription Revenue $323.6M

Latest Ratings for DOCU

DateFirmActionFromTo
Oct 2020UBSInitiates Coverage OnBuy
Oct 2020Morgan StanleyUpgradesEqual-WeightOverweight
Sep 2020RBC CapitalMaintainsOutperform

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