On Friday, JMP Securities updated its assessment of Docusign Inc. (NASDAQ: DOCU), increasing the company's price target to $124 from the previous $108, while keeping a Market Outperform rating on the stock.
According to InvestingPro analysis, the company, currently valued at $17 billion, appears fairly valued based on its comprehensive Fair Value model. This adjustment follows Docusign's release of third-quarter financial results that surpassed market expectations.
The electronic signature company reported non-GAAP earnings per share (EPS) of $0.90, which exceeded the consensus estimate of $0.87. Revenue for the quarter reached $755 million, also beating the expected $745 million.
With impressive gross profit margins of 80.25% and strong cash flows, as highlighted by InvestingPro data, this marked an 8% year-over-year increase, improving from the 7% growth seen in the previous quarter, and signified the first acceleration after thirteen consecutive quarters of slowing momentum.
Docusign's billings were another highlight, coming in at $752 million against a consensus of $716 million, demonstrating a 9% year-over-year growth and a significant jump from the 2% growth recorded last quarter. The company's net retention rate also saw an uptick, reaching 100%, a slight improvement from 99% in the previous quarter.
The adjusted operating margin for Docusign stood firm at 29.6%, consistent with last quarter's performance and higher than the consensus forecast of 29.1%. The strong quarterly performance fueled a positive response in the stock's aftermarket trading, with shares rising 14%.
Trading near its 52-week high with a P/E ratio of 17.4x, this rally contributed to the stock's impressive year-to-date increase of 41%, outpacing the Russell 3000's 27% rise over the same period.
InvestingPro subscribers can access 14 additional key insights about DocuSign (NASDAQ:DOCU)'s financial health and growth prospects through the comprehensive Pro Research Report.
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