Sell DocuSign, Buy Box: Digital Document Landscape Is 'Competitive,' Analyst Says

Although shares of DocuSign Inc. DOCU have lost around 64% year to date, there is further downside due to intensifying competition and execution issues, while Box Inc.’s BOX value seems underappreciated, according to Morgan Stanley.

The Analyst: Josh Baer downgraded the rating for DocuSign from Equal-Weight Underweight, while reducing the price target from $73 to $47. In a separate note, analyst Baer upgraded the rating for Box from Equal-Weight to Overweight, while raising the price target from $32 to $34.

See Also: Analysts Divided Over DocuSign Downsizing Plans

The Thesis: In the near-term, there could be continued execution issues at DocuSign, stemming from the demand gap post-covid and a “transition period following significant leadership turnover and attrition,” Baer said.

San Francisco-based DocuSign has a large new cohort of sales representatives, which may take time to ramp up, while the recently announced restructuring and headcount reduction could “cause additional near-term disruption,” the analyst added.

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In a separate note, Baer mentioned that Redwood City, California-based Box has exhibited strong execution, has a more favorable competitive landscape, and there is upside to margins.

The company’s recent results demonstrate “higher net retention, lower churn, and strong large deal momentum, with consistent execution across geographies, customer sizes and verticals,” which suggest “Box's Suite selling and expanding product capabilities are allowing customers to more easily realize the value of the full Box platform - key in a challenging macro,” he added.

See Also: Why DocuSign Stock Is Sliding Today

DOCU, BOX Price Action: Shares of DocuSign had declined by 1.40% to $52.72, while Box’s stock had risen by 7.83% to $26.30 at the time of publication Monday.