DocuSign Raises Annual Guidance for Revenue; Target Price $389 in Best-Case Scenario

DocuSign, an American company that allows organizations to manage electronic agreements, reported better-than-expected earnings and revenue in the second quarter and raised its full-year revenue guidance.

The San Francisco, California-based company reported quarterly adjusted earnings of $0.47 per share for the quarter ended in July, beating the Wall Street consensus estimates of $0.40 per share.

DocuSign said its revenue jumped nearly 50% to $511.8 million from a year ago. That was higher than the market expectations of $485.27 million.

The company raised its annual revenue forecast from $2.027-$2.039 billion to $2.078-$2.088 billion. It was higher than analysts’ expectations of roughly $2.05 billion. Additionally, DocuSign raised its subscription revenue forecast to $1.995-$2.005 billion from $1.953-$1.965 billion previously.

DocuSign shares closed nearly flat at $294.57 on Thursday. The stock rose over 30% so far this year.

Analyst Comments

“DocuSign (DOCU) reported 45% billings growth at $2B revenue scale and crossed the 1M customer threshold while delivering 32% FCF margin – an impressive achievement. As the company maintains leadership in eSign and builds Agreement Cloud, we see plenty of growth to come. Remain OW with $350 price target,” noted Stan Zlotsky, equity analyst at Morgan Stanley.

“DocuSign (DOCU) has established itself as the de-facto eSign standard, accelerating business transactions via their secure cloud-based platform with >450K customers globally, including >300 of the F500 and hundreds of millions of users. We see DOCU’s strong competitive positioning coupled with durable COVID tailwinds as helping it penetrate a $25B+ market oppy while traction of the Agreement Cloud drives long-term growth. However, with DOCU trading relatively in line with peers on an EV/S/Growth basis, these dynamics appear underappreciated.”

DocuSign Stock Price Forecast

Fourteen analysts who offered stock ratings for DocuSign in the last three months forecast the average price in 12 months of $308.77 with a high forecast of $389.00 and a low forecast of $215.00.

The average price target represents a 4.82% change from the last price of $294.57. From those 14 analysts, 13 rated “Buy”, one rated “Hold” while none rated “Sell”, according to Tipranks.

Morgan Stanley gave the base target price of $350 with a high of $487 under a bull scenario and $200 under the worst-case scenario. The firm gave an “Overweight” rating on the company’s stock.

Several other analysts have also updated their stock outlook. BofA Global Research raised the price objective to $360 from $250. Oppenheimer lifted the target price to $310 from $260. RBC increased the price target to $345 from $280. JPMorgan upped the target price to $300 from $255.

“We are raising our fair value estimate for narrow-moat DocuSign to $290 per share, from $207, based on strong results and guidance. DocuSign delivered another strong quarter, exceeding our above-consensus revenue estimates by a healthy margin. The company also provided strong guidance for the remainder of the year. It expects to continue on its path of high growth, fueled by strong user additions and upselling activity,” noted Dan Romanoff, equity analyst at Morningstar.

“Continued quarterly strength and continually increasing guidance gave us the confidence to sharply raise our growth and profitability forecasts. We think e-signatures and the Agreement Cloud, along with rapid international growth, are here to stay and that the financial performance is more sustainable than we were previously modelling. Still, shares have run over the last few months, and we, therefore, see the stock as fairly valued”

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