DocuSign is being questioned by analysts after it posted poor quarterly results, which indicated a slowdown. DocuSign shares gained during the Pandemic, as more people shifted to online shopping. However, they have dropped nearly 43% in the past year. Kirk Materne, Evercore ISI’s stock analyst, downgraded it to in-line from outperform. He stated in a note that DocuSign has little upside and that there is more payoff with other stocks. Materne stated that he was not a fan of the downgrade in EPS and DOCU shares may be close to bottom, but that a long-term perspective would show DocuSign is far more likely to see a significant rebound in billings growth. DocuSign stated that it expected 7% to 8.8% annual billings growth. We believe that billings will slow down to 20% before the margin guide can point investors towards a 20%+ operating profit. He said that margin outlook was for FY24 in order to compensate the slowdown in revenue. Materne reduced the price target for the stock from $100 to $75, which translates into a 14% decline in shares since Thursday’s closing. Brad Sills of Bank of America downgraded DocuSign’s rating to neutral, from buy. This was due to disappointing billings. According to the bank’s prior buy rating, billings growth was expected to be in the teens for the fiscal year 2023. According to him, growth will not be comparable until the second quarter of 2024’s fiscal year. Jake Roberge, William Blair’s chief executive, downgraded DocuSign to Market Perform, noting that “customers have not been churning off of the platform”, but DocuSign has seen many customers reduce platform consumption from pandemic peak periods as their contracts are up for renewal. DocuSign management has decided to cut back on its annual hiring targets to improve profitability. Premarket trading saw DocuSign shares drop by nearly 27% — CNBC’s Michael Bloom contributed reporting
