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On Friday, JPMorgan analysts adjusted the price target for Docusign Inc. (NASDAQ: DOCU) stock to $77 from $81, maintaining a Neutral rating. This change follows the company’s recent first-quarter performance, which showed a miss in billings despite surpassing revenue and margin expectations. According to InvestingPro data, DocuSign maintains impressive gross profit margins of 79.25% and currently trades at $92.90, with analysis suggesting the stock may be undervalued.
Docusign reported a total revenue of $764 million for the first quarter, marking a 7.6% year-over-year increase, slightly above consensus expectations. However, billings reached $740 million, falling short of guidance by approximately $6 million. The company attributed this miss to timing issues related to its go-to-market strategy changes, not a lack of demand. InvestingPro analysis reveals the company maintains strong financial health with a GREAT overall score, supported by robust cash flows and profitability metrics.
The company also reported improvements in customer metrics, with total customers growing to 1.71 million, a 9.6% increase year-over-year. Enterprise and commercial customers rose to 268,000, up 8.1% year-over-year. Docusign highlighted stable Dollar Net Retention at 101%, with expectations for moderate improvement throughout the year. This growth trajectory aligns with the company’s strong revenue CAGR of 25% over the past five years, as reported by InvestingPro, which offers 12 additional exclusive insights about DocuSign’s performance and prospects.
Docusign’s guidance for the second quarter includes a total revenue forecast of $779 million, representing a 5.8% year-over-year increase. Despite favorable foreign exchange impacts, the company revised its fiscal year 2026 billings outlook downward, citing early renewal timing and macroeconomic factors as contributing to this adjustment.
The company remains optimistic about its Identity and Access Management (IAM) platform, noting significant adoption and new innovations. Docusign continues to invest in its growth strategy, aiming for double-digit growth in the future.
In other recent news, DocuSign Inc (NASDAQ:DOCU). reported strong financial results for the first quarter of fiscal year 2026, surpassing market expectations. The company achieved an earnings per share of $0.90, exceeding the forecasted $0.81, and reported revenue of $763.7 million, which was higher than the anticipated $749.19 million. Despite these positive results, Evercore ISI analysts noted that DocuSign’s billings growth of 4% fell short of expectations due to fewer early renewals, leading to a downward revision of full-year billings guidance by approximately $70 million. Meanwhile, Morgan Stanley (NYSE:MS) analysts adjusted their price target for DocuSign from $92.00 to $86.00, maintaining an Equalweight rating due to ongoing challenges like sales force productivity issues and leadership turnover. The analysts highlighted potential for margin expansion and solid free cash flow, which could support the company’s valuation. DocuSign’s recent launch of new AI-driven products is expected to enhance its competitive edge in the market. The company’s management remains confident in its strategic direction, projecting a revenue growth rate of 6% for the full fiscal year.
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