Posted: March 10, 2023 1:55 PM ET
DocuSign shares fell on Friday after Wall Street said an ongoing reorganization of the electronic signature company would likely cause near-term turbulence, although it beat expectations for the quarter.
Shares of DocuSign DOCU fell 20% to an intraday low of $53.71, and were last down 19%. Shares also fell 20.1% a year ago this time after DocuSign reported results, but the drop would be the biggest since June 10, when shares fell 24.5% after earnings. . By comparison, the S&P 500 SPX index was down 1.5% and the…
DocuSign shares fell on Friday after Wall Street said an ongoing reorganization of the electronic signature company would likely cause near-term turbulence, although it beat expectations for the quarter.
DocuSign
DOCUMENT
shares fell 20% to an intraday low of $53.71, and were last down 19%. Shares also fell 20.1% a year ago this time after DocuSign reported results, but the drop would be the biggest since June 10, when shares fell 24.5% after earnings. . In comparison, the S&P 500 index
SPX
was down 1.5% and the tech-heavy Nasdaq composite index
COMP
was down 1.8%.
Late Thursday, DocuSign beat Wall Street estimates for the quarter and announced it was looking for a new chief financial officer as Cynthia Gaylor left that role.
Of the 25 analysts who cover DocuSign, seven have buy ratings, 14 have hold ratings and four have sell ratings, along with a price target of $51.57, according to FactSet data.
Jefferies analyst Brent Thill, who has a buy rating and price target of $80, said the reorganization of DocuSign’s marketing could put international growth under pressure in the coming quarters and produce short-term turbulence.
“However, (the company) guided margins of 21-23% in F24 below investor expectations as DocuSign plans to reinvest 2nd RIF cost savings on the product side,” Thill said. “We will keep an eye on these investments and how they drive product strategy.”
Citi Research analyst Tyler Radke, who has a Buy rating and $80 price target, said DocuSign had recorded “another respectable pace,” albeit a “mixed bag,” as the management acknowledged “a deteriorating macro and demand environment”.
“While the high-level guidance for FY24 was unsurprisingly (almost) re-iterated from last quarter’s ‘initial range’, the lack of margin expansion for FY24 was below our expectations, especially with the approximately 20% cumulative (strength reductions) seen recently,” Radke said. “Cost savings are reinvested in the company’s R&D.”
Wedbush analyst Dan Ives, who said in June that “DocuSign’s core growth story is now mostly over,” said Thursday’s report was a “step in the right direction with some caution in the air”.
“The company has made progress towards achieving its long-term goals, but there is still a long way to go to regain the trust of the streets, customer sentiment remaining cautious, a tougher competitive landscape and operating environment difficult impacting DocuSign 2023,” Ives said, maintaining his neutral rating on the stock and raising his price target to $60 from $55.