Published: March 10, 2023 at 1:55 PM ET
Shares of DocuSign fell Friday after Wall Street said an ongoing reorganization of the electronic signature company is likely to create turbulence in the near term, even if it beat expectations for the quarter.
DocuSign DOCU shares fell as much as 20% to an intraday low of $53.71 and were last down 19%. Shares also fell 20.1% a year ago, this time after DocuSign reported results, but the drop would be the biggest since June 10, when shares fell 24.5% after earnings. By comparison, the S&P 500 index SPX fell 1.5% and the tech-heavy…
Shares of DocuSign fell Friday after Wall Street said an ongoing reorganization of the electronic signature company is likely to create turbulence in the near term, even if it beat expectations for the quarter.
DocuSign
DOCU
shares fell as much as 20% to an intraday low of $53.71, and were most recently down 19%. Shares also fell 20.1% a year ago, this time after DocuSign reported results, but the drop would be the biggest since June 10, when shares fell 24.5% after earnings. For comparison, the S&P 500 index
SPX
fell 1.5% and the tech-heavy Nasdaq Composite Index
COMP
was 1.8% lower.
DocuSign topped Wall Street’s estimates for the quarter late Thursday, announcing it was seeking a new chief financial officer as Cynthia Gaylor stepped down from that position.
Of the 25 analysts tracking DocuSign, seven have a buy-grade rating, 14 have a hold rating and four have a sell rating, along with a price target of $51.57, according to FactSet data.
Jefferies analyst Brent Thill, who has a buy rating and an $80 price target, said DocuSign’s go-to-market reorganization could weigh on international growth in the coming quarters and create turbulence in the near term.
“However, [the company] guided for 21-23% margins in F24 below investor expectations as DocuSign plans to reinvest the cost savings from the 2nd RIF on the product side,” Thill said. direct.”
Citi Research analyst Tyler Radke, who has a buy rating and an $80 price target, said DocuSign delivered “another respectable beat,” albeit a “mixed bag,” as management acknowledged, “a deteriorating macro and demand environment.”
“While the topline guidance for FY24 was not surprising [almost] reiterated against previous Q’s ‘initial range’, the lack of FY24 margin expansion was below our expectations, especially with the cumulative ~20% [reductions on force] seen recently,” Radke said. “The cost savings are reinvested in the R&D side of the business.”
Wedbush analyst Dan Ives, who said in June that DocuSign’s “core growth story is now essentially over,” said Thursday’s report was a “step in the right direction with some caution in the air.”
“The company has made progress towards its long-term goals, but there is still much to make up for to regain Street’s confidence, with customer sentiment remaining cautious, a tougher competitive landscape and a challenging work environment impacting DocuSign. 2023,” Ives said, sticking to his neutral rating for the stock and raising his price target from $55 to $60.
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