DocuSign's Turnaround Story and Profitable Growth Strategy Post 1Q Results is Regaining Market Confidence: Analysts

Needham analyst Scott Berg reiterates a Hold rating on DocuSign Inc DOCU.

DOCU reported positive 1Q FY24 results with a ~2% beat on subscription revenue and upside to margin estimates suggesting execution is improving. 

However, billings commentary and weak billings guidance kept Berg on the sidelines. 

In-line guidance reflects his view that net new sales are not improving yet. Thus he believes investors will focus on billings growth throughout FY24.

JMP Securities analyst Patrick Walravens reiterates DocuSign with a Market Outperform and maintains an $84 price target.

Walravens likes this story as an opportunity for capital appreciation. He views DocuSign as "a better way to agree" that offers a compelling value proposition and that is well-suited for applying artificial intelligence to the world's most extensive data set of agreements. 

The analyst appreciates the new CEO Allan Thysegen helping stabilize the business, adding new leadership, and setting the foundation for growth in FY25 and FY26.

Walravens' expectations are relatively low, with guidance implying a 3%-4% billings growth rate for the year.

He thinks some customers have burned through their excess envelopes from the pandemic. The analyst also flagged the attractive valuation.

Wedbush analyst Daniel Ives maintains DocuSign with a Neutral and raises the price target from $60 to $67.

DocuSign delivered strong 1Q results featuring beats on the top and bottom line, with the company demonstrating continued durability of its core technology moat and leverage in its operating model despite the challenging operating environment.

Ives views this quarter as a step in the right direction towards regaining the Street's confidence as DOCU is starting to turn the corner on its profitable growth strategy while investing in the long-term.

Oppenheimer analyst George Iwanyc reiterates a Perform rating on DocuSign.

DocuSign reported better-than-expected 1Q results supported by a higher rate of on-time renewals flowing through to 2Q guidance. 

Positives include strong operational execution and early signs of progress with DocuSign's product initiatives and realigned sales motion. 

However, the demand environment remains challenging, with cautious customer behavior weighing on expansion rates and driving partial churn. Iwanyc remains optimistic about DocuSign's strategic adjustments and execution. 

Price Action: DOCU shares traded lower by 3.28% at $56.56 on the last check Friday.

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