The DocuSign stock is declining as it gives “Big Whiff” billing guidance
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Photograph by Stan Olszewski
Shares of
DocuSign
fell in pre-market trading on Friday after the e-signature software company released a fourth-quarter forecast that missed estimates.
Analysts at Citigroup said that DocuSign “delivered one of the largest [Software as a Service] smells in recent memory. ”
The company said it expects revenue for the fourth quarter of the fiscal year ending Jan. 31, at $ 557 million to $ 563 million, below analysts’ expectations of $ 573.8 million. DocuSign expects fourth-quarter billing of $ 647 million to $ 659 million. Analysts forecast fourth-quarter bills of $ 705.4 million, according to FactSet.
“With a largely resilient performance vs [work-from-home] with peers over the last two queries, we are surprised that DOCU is seeing significant customer behavior / performance issues emerge now, and of this magnitude, “said Citigroup analysts, led by Tyler Radke.
The company maintained its Buy rating on the stock, but reduced its price target to $ 231.
DocuSign reported third-quarter results that showed signs of weakened demand. CEO Dan Springer said the company “after six quarters of accelerated growth” saw “customers return to more normalized buying patterns.”
Springer told Barrons in an interview that some customers accelerated demand during the pandemic, and that consumption has returned to a more normal level.
Analysts at RBC Capital Markets maintained their Outperform rating on the stock, but lowered the price target to $ 220 from $ 345.
RBC noted how DocuSign’s “Covid boost boosted” and demand returned to more normalized levels “faster than expected.”
“Although we remain optimistic in the long run, this demand pivot may take time, and we expect shares in DocuSign to be in the penalty box in the short term,” analysts wrote.
Wedbush analysts downgraded shares of DocuSign to Neutral from Outperform and lowered their price target to $ 200 from $ 340.
Analysts said it appears that DocuSign “was blinded by the rapidly changing sales environment, which is a worrying trend for Street.”
Evercore is considering the share of Outperform, but cut the price target to $ 200.
“DocuSign simply misunderstood the market in terms of demand, and it led to a faster-than-expected slowdown in billing growth,” analysts wrote in a research note.
DocuSign shares fell 32.1% in pre-market trading on Friday to $ 158.64.
Write to Joe Woelfel at joseph.woelfel@barrons.com
