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On Friday, RBC Capital analysts maintained their Sector Perform rating and a $90.00 price target for Docusign Inc. (NASDAQ: DOCU). This decision follows the company’s recent quarterly report, which showed mixed results and led to a significant decline in the stock’s after-hours trading. According to InvestingPro data, the stock is currently trading below its Fair Value, despite showing impressive gross profit margins of 79.25%.
Docusign reported weaker-than-expected billings growth, which contributed to a 17% drop in its stock price during after-hours trading. The company noted that its net revenue retention (NRR) remained stable at 101%, but billings growth was slightly below both guidance and consensus, increasing just 4% year-over-year. Despite these challenges, the company maintains strong fundamentals with revenue of nearly $3 billion in the last twelve months and a healthy return on assets of 30.58%.
The company also revised its fiscal year 2026 billings guidance, lowering it by $15 million below consensus at the midpoint. Additionally, the guidance for the second quarter billings was also below expectations. Management expressed optimism about potential improvements in dollar net retention throughout the year, driven by better gross retention and increased IAM upsells. For deeper insights into DOCU’s valuation and 14 additional key investment tips, check out the comprehensive research available on InvestingPro.
RBC Capital analysts acknowledged the promising adoption metrics for IAM but expressed a cautious stance, opting to remain in a "wait and see" mode after what they described as a noisy quarter.
In other recent news, Docusign Inc. reported its first-quarter results, which revealed a mixed performance. The company achieved a total revenue of $764 million, marking a 7.6% year-over-year increase, slightly surpassing consensus expectations. However, billings came in at $738 million, falling short of the midpoint guidance of $746 million. This shortfall was attributed to changes in the company’s go-to-market strategy, affecting early renewals. As a result, several analysts, including those from Piper Sandler, BofA Securities, JPMorgan, and Morgan Stanley (NYSE:MS), have adjusted their price targets for Docusign. Piper Sandler and BofA Securities both set their new targets at $85, while JPMorgan lowered theirs to $77, and Morgan Stanley adjusted theirs to $86. These adjustments reflect a cautious stance on the company’s near-term outlook amid macroeconomic uncertainties and sales force challenges. Despite these challenges, Docusign continues to see growth in its customer base and remains optimistic about its Identity and Access Management platform. The company’s guidance for the second quarter anticipates a total revenue of $779 million, representing a 5.8% year-over-year increase.
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