3 DocuSign Stock Analysts On Q4 Results: Should Investors Buy The Dip?

Shares of DocuSign, Inc. DOCU dipped Thursday afternoon after the eSignature solution company reported fourth-quarter results that disappointed some investors.

The DocuSign Analysts: Needham analyst Scott Berg maintains a Buy rating on DocuSign with an unchanged $275 price target.

Morgan Stanley analyst Stan Zlotsky maintains an Overweight rating with a price target lifted from $280 to $290.

Wedbush analyst Daniel Ives maintains an Outperform rating with an unchanged $300 price target.

Needham On DocuSign's 'Solid' Report: DocuSign reported "solid" fourth-quarter results, as revenue increased 56.8% year-over-year to $431 million and subscription revenue rose 58.9%, Berg said in a note.

Billings growth decelerated 1,770 basis points quarter-over-quarter to 45.8%, and the analyst said investors are focused on this figure.

Yet most metrics remain "within earshot of the outsized" performance seen in the first three quarters of the fiscal year, so overall sales trends remain intact, he said.

DocuSign said its net revenue retention is expected to approach the high end of its 118% guided range in fiscal 2022, Berg said.

The company should be able to hit 40% revenue growth again in fiscal 2022, according to Needham.

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Morgan Stanley's 5 Positive DocuSign Takeaways: DocuSign's report reaffirmed the sustainability of its growth and signals why the stock deserves a premium valuation, Zlotsky said in a note.

The analyst's five key takeaways from the report are:

1. Billings guidance for 2022 was 32% at the midpoint, but the company's continued momentum implies "plenty of room" for outperformance.

2. International growth accelerated from 77% in the third quarter to 83% in the fourth quarter, and all regions outside the U.S. are growing faster than expected.

3. The adjusted free cash flow margin ended 2021 at 20%, while operating margins of 12.4% emphasize the "strong unit economics underlying DocuSign's business model."

4. The enterprise/commercial customer count ended the fiscal year higher by 67%, while the web customer cohort expanded by 49%.

5. Net revenue retention of 123% has been "steadily marching up" throughout the fiscal year and came in at 123% in the fourth quarter.

Wedbush Sees Top Next-Gen Software Stock: DocuSign remains "one of our favorite next generation software plays,'' as the company's products and services are attractive to small businesses and Fortune 500 organizations alike, Ives said in a note.

The company continues to show momentum, especially around the Agreement Cloud, the analyst said.

"DOCU has invested significant R&D dollars in its core platform with the company's plug and play features, ease of use, brand awareness, high technical expertise, and network effect (APIs) that have been key ingredients in its recipe for success in building this strong market presence," he said.

DOCU Price Action: Shares of Docusign were trading lower by 7.53% Friday morning at $208.27.