By Senad Karaahmetovic
A Piper Sandler analyst downgraded shares of DocuSign Inc (NASDAQ:DOCU) to Underweight from Neutral and cut the price target to $54 from $65.
The analyst sees an elevated risk profile amid macro headwinds and the CEO transition. Moreover, he is concerned about consistent execution challenges and rapid employee turnover.
“Commentary from ADBE combined with a rapidly deteriorating macro indicate to us that DOCU is likely facing both execution and market challenges, which add to the overall risk profile in our view,” the analyst said in a client note.
The analyst also said that DOCU is likely experiencing fewer deals amid worsening macro data. Moreover, the company is forced to “re-visit the GTM strategy as the demand landscape has shifted from beneath them.”
“Reengineering the sales organization to adapt to the lower growth environment has proven to be tricky, with sales reps leaving the company to look for greener pastures,” he added.
Elsewhere, the ongoing CEO transition poses a “meaningful execution risk.”
“While we believe a leadership change is likely necessary to achieve the balanced, longer-term growth and profitability profile, we also believe this adds further to execution risk over the next few quarters at least. Although expectations were meaningfully reset coming into the year, another billings guide down in 1Q shows that visibility remains cloudy, especially with a worsening macro and sales rep turnover.”