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On Friday, BofA Securities analysts adjusted their outlook on Docusign Inc. (NASDAQ: DOCU), reducing the price target to $85 from a previous $88, while maintaining a Neutral rating. The revision follows the company’s first-quarter results, which did not meet expectations. According to InvestingPro data, DocuSign currently trades at $92.90, with analysis suggesting the stock is undervalued despite its impressive 70% return over the past year.
Docusign reported billings of $738 million, a 4% year-over-year increase, but fell short of the midpoint guidance of $746 million. The shortfall comes after two quarters of exceeding expectations, with the prior quarters showing an 11% and 6% increase in billings. Despite the billing challenges, the company maintains robust financial health with an impressive 79% gross profit margin and a strong return on assets of 31%.
The analysts noted that the recent miss might be due to early renewals in the third and fourth quarters, which were not as prevalent in the first quarter. This change in renewal patterns was attributed to adjustments in the company’s go-to-market strategies.
In light of the recent performance, BofA Securities has revised its estimates in line with Docusign’s guidance. The adjustment reflects a cautious stance on the company’s near-term outlook.
In other recent news, DocuSign Inc (NASDAQ:DOCU). reported its first-quarter earnings for fiscal year 2026, surpassing market expectations with an earnings per share of $0.90, which exceeded the forecasted $0.81. The company achieved a revenue of $764 million, marking an 8% year-over-year increase, slightly above consensus expectations. Despite these positive results, DocuSign faced challenges with its billings, which reached $740 million, falling short of guidance by approximately $6 million. The company attributed this miss to timing issues related to changes in its go-to-market strategy.
In light of these developments, JPMorgan and Morgan Stanley (NYSE:MS) both lowered their price targets for DocuSign, with JPMorgan adjusting from $81 to $77 and Morgan Stanley from $92 to $86, while maintaining their respective Neutral and Equalweight ratings. Evercore ISI maintained an In Line rating with a $90 price target, noting the lag in billings growth. DocuSign’s management revised its full-year billings guidance downward by approximately $70 million, citing fewer early renewals and macroeconomic conditions.
Despite these challenges, the company expressed optimism about its Identity and Access Management platform, highlighting significant adoption and new innovations. DocuSign continues to focus on its growth strategy, aiming for double-digit growth in the future.
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