Benzinga - Shares of DocuSign Inc (NASDAQ: DOCU) fell in the premarket on Friday, even after the company reported better-than-expected fourth-quarter earnings.
- Morgan Stanley analyst Josh Baer maintained an Underweight rating and price target of $48.
- JMP Securities analyst Patrick Walravens reaffirmed a Market Outperform rating and price target of $84.
- RBC Capital Markets analyst Rishi Jaluria maintained a Sector Perform rating, while raising the price target from $53 to $59.
- Needham analyst Scott Berg maintained a Hold rating on the stock.
Morgan Stanley
- Although DocuSign reported strong fourth-quarter results that beat the consensus estimates, investors had expected the second RIF restructuring to flow to fiscal 2024 margins, Baer said.
- “Instead, FY24 margin outlook improved by only ~1% while rest of savings reinvested in R&D,” he added.
- The company reported better than expected results and “generally in line to good” guidance, Walravens said in a note.
- “While DocuSign is in transition and facing a difficult macroeconomic environment, we continue to like this story for a number of reasons,” the analyst wrote. There is a “shift of investment from the sales organization to product development with a focus on using AI to help create smarter agreements and save customers time.”
- “DocuSign delivered in-line results with disappointing FY24 guidance,” Jaluria said.
- “FY24 billings guidance of 2% growth was in-line to slightly below expectations, but the bigger surprise was guidance implying muted margin expansion, as investors expected the cumulative ~20% reduction in the workforce since September to lead to a better margin outlook,” the analyst wrote. “Instead, management plans to reinvest in self-service / PLG and R&D in order to help turnaround the business / growth profile."
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- “Expectations of macro pressures on both net new and expansion sales are pressuring initial FY24 billings guidance of 2% which we believe was disappointing versus prior commentary on a mid-single digit growth expectation,” Berg said.
- “On the positive side, relatively new CEO Allan Thygesen stressed a greater emphasis on product innovation which we believe will be a welcome development for DOCU shareholders seeking clarity on where the company's next growth leg comes from,” he added.
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