On Friday, Piper Sandler adjusted its outlook on Docusign Inc. (NASDAQ: DOCU), raising the price target to $90 from the previous $60, while maintaining a Neutral rating on the company's shares. The revision follows Docusign's third fiscal quarter results, which surpassed expectations in terms of both revenue and earnings, outperforming a conservative forecast.
According to InvestingPro data, the stock has demonstrated remarkable strength, delivering a 76.69% return over the past year and currently trading near its 52-week high of $86.75.
The company's management drew attention to the success of its Identity Authentication Management (IAM) platform, which saw an increase in billings growth from the last quarter. Additionally, the Net Retention Rate (NRR) improved slightly, reaching 100%.
Looking forward, while the forecast for fiscal year 2025 has been modestly elevated in terms of revenue and billings, the company has not set definitive expectations for the subsequent fiscal year. InvestingPro analysis reveals impressive fundamentals, including an 80.25% gross profit margin and a "GREAT" financial health score. Subscribers can access 14 additional ProTips and comprehensive valuation metrics in the Pro Research Report.
The analyst from Piper Sandler expressed optimism about the stabilization seen in Docusign's performance but is looking for more substantial signs of a turning point in the company's growth trajectory. The analyst also noted the potential of the new IAM platform but acknowledged that it is still in the early stages of capitalizing on the broader market opportunity.
The price target increase is a result of updating the firm's discounted cash flow (DCF) model to calendar year 2029. Piper Sandler's stance remains cautious, with the firm awaiting more consistent indicators of growth from new avenues before altering its rating.
In other recent news, Docusign Inc. has been the subject of multiple analyst upgrades following a robust quarterly performance. Baird raised its price target for the company to $100, maintaining a neutral rating. This adjustment was made in light of Docusign's recent financial report, which showed significant gains in revenue, margins, and billings.
UBS also increased Docusign's price target to $100, citing a notable increase in billings and impressive gross profit margins of 80.25%. Jefferies maintained a positive outlook on Docusign, lifting the price target to $115, while highlighting the company's accelerating growth in revenue and billings.
Needham reaffirmed its hold rating on Docusign following higher-than-expected revenue and earnings per share. The company's recent financial report also showed a significant increase in billings and a healthy net retention rate of 100%.
Lastly, Citi raised its price target for Docusign to $113, citing the company's impressive third-quarter performance and promising growth indicators.
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