DocuSign Shares Gain On 'Better-Than-Feared' Earnings Beat: 5 Analysts Chime In

Zinger Key Points
  • DocuSign beat expectations on all metrics, but it was “against a very low bar," one analyst says.
  • Efforts to retool the sales organization are beginning to "pay off,” another analyst noted.

Shares of DocuSign Inc. DOCU jumped more than 17% in Friday’s pre-market after the company reported better-than-expected quarterly results and raised its full-year billings outlook.

Here's what analysts had to say:

RBC Capital Markets

Analyst Rishi Jaluria reiterated a Sector Perform rating and price target of $65.

“DOCU delivered better-than-feared F2Q with billings results/ guide ahead of consensus,” with a billings beat that was “larger than usual,” Jaluria said.

“While not explicit on the call, we got the sense F2Q benefited from some early renewals/pull-forward.”

The implied fiscal fourth-quarter guidance “calls for a slight acceleration,” Jaluria added. “While we did like to see the slight raise on FY billings, F2H still calls for mid-single-digit YoY growth off much easier comps, a disappointing indicator for future growth.”

JMP Securities

DocuSign reported better-than-expected quarterly results, “with non-GAAP EPS of $0.44 and an 18% operating margin on revenue of $622M," according to analyst Patrick Walravens, who maintains a Market Outperform rating and price target of $84.

The company continues to be “the clear leader in eSignature” and is poised to “deliver on a broader system of agreement, which together represent a $50B market opportunity,” he added.

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Although DocuSign beat expectations on all metrics, it was “against a very low bar,” Needham analyst Scott Berg says.

“Billings growth of +8.8% was the 5th straight declining quarter, although it beat guidance by seven points for the first outperformance in several quarters, he stated, reiterating a Hold rating for the San Francisco-based company.

The guidance reflects macro pressures on DocuSign’s sales in the second half of the year, “even with sales productivity improvements.”

“Although commentary suggests modest overall execution in the business, we remain on the sidelines due to the combination of uneven sales execution, customers whose volume seems to be right-sized, and an uncertain macro backdrop,” Berg added.

Morgan Stanley

Analyst Keith Weiss maintained an Equal-Weight rating and price target of $73.

“DocuSign delivered a revenue and billings beat and raise, while making progress on stabilizing attrition, hiring key leaders, and committing to protecting margins/FCF through comprehensive expense review,” Weiss said. “However, a weak 2H23 (~5% YoY billings guide), likely pressures FY24/25.”

Bank of America Securities

Analyst Brad Sills is "encouraged" by DocuSign's "solid billings upside in Q2 (+9% y/y vs. our 0%)."

While efforts to retool the sales organization are beginning to "pay off,” Sills expressed concern over “uncertainty around execution, leadership changes and macro headwinds.”

Sills reaffirmed a Neutral rating and raised the price target from $70 to $80.

DOCU Price Action: Shares of DocuSign had risen by 8.51% to $62.88 at the time of publication Friday.

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Posted In: Analyst ColorEarningsNewsPrice TargetReiterationAnalyst RatingsMoversTrading IdeasBofA SecuritiesBrad SillsJMP SecuritiesKeith WeissMorgan StanleyNeedhamPatrick WalravensRBC Capital MarketsRishi JaluriaScott Berg
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