Bullish indicating open at $55-$60, IPO prices at $37
On Friday, Piper Sandler analysts adjusted their outlook on Docusign Inc. (NASDAQ: DOCU) by lowering the price target to $85 from $90, while maintaining a Neutral rating. This adjustment follows a report of billings coming in below consensus and guidance, attributed to lower than expected early renewals. According to InvestingPro data, despite recent price movements, the stock appears to be trading below its Fair Value, with impressive financial metrics including a 79.25% gross profit margin.
The analysts noted that Docusign’s fiscal year 2026 billings growth expectations have been reduced, despite favorable foreign exchange conditions. The company’s management is adopting a conservative approach to bookings and early renewal projections, contributing to the revised expectations.
In the recent quarter, Docusign experienced positive developments with solid Identity and Access Management (IAM) traction and a Net Revenue Retention (NRR) rate of 101%. These factors, however, did not offset the impact of the billings miss.
Piper Sandler analysts emphasized the large reduction in billings growth for fiscal year 2026 and highlighted ongoing macroeconomic uncertainties as reasons for maintaining a cautious outlook on Docusign’s stock.
The analysts concluded that Docusign remains a "wait-and-see" story, reinforcing their Neutral rating with the newly adjusted price target of $85.
In other recent news, Docusign Inc. reported its first-quarter earnings, revealing a total revenue of $764 million, which marks a 7.6% year-over-year increase and slightly surpasses consensus expectations. However, the company faced challenges with its billings, reporting $738 million, which fell short of the midpoint guidance of $746 million. This shortfall was attributed to changes in the company’s go-to-market strategy, affecting the timing of early renewals. In response to these results, several analyst firms have adjusted their outlooks. Needham maintained a Hold rating, while BofA Securities and JPMorgan lowered their price targets to $85 and $77, respectively, maintaining Neutral ratings. Morgan Stanley (NYSE:MS) also reduced its price target to $86, citing sales force productivity issues and leadership turnover. Despite these challenges, Docusign continues to focus on its Identity and Access Management (IAM) platform, noting significant adoption and new innovations. Evercore ISI maintained an In Line rating and a $90.00 price target, acknowledging strong revenue and earnings growth but highlighting the lag in billings growth. The company revised its full-year billings guidance downward, considering fewer early renewals and macroeconomic factors, while expressing confidence in its long-term business trends.
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