Why This DocuSign Analyst Has Just Turned Bearish

Shares of DocuSign Inc DOCU came under pressure last week, after the company announced plans to slash 10% of its workforce.

The latest layoff announcement sends “a negative demand signal” about the company’s growth in fiscal 2024, which the stock does not reflect, according to UBS.

The Analyst: Karl Keirstead downgraded DocuSign from Neutral to Sell, while keeping the price target unchanged at $52.

Check out other analyst stock ratings.

The Thesis: The stock has rallied around 54% from its December lows and does not appear compelling relative to other low-growth software peers, Keirstead said in the downgrade note.

“While intrigued by changes that the new CEO might make, our latest round of checks point to flattish/negative billings growth in CY23/FY24, a highly-penetrated TAM, an increasingly competitive rival in the form of Adobe, continued contract volume down-sizing risk upon renewals and a slowdown in the CLM segment,” the analyst wrote.

“We’re also cognizant that DocuSign has historically been very tied to the go-to-market engine of Salesforce, which is going through an unprecedented growth deceleration as well as internal disruption,” he added.

DOCU Price Action: Shares of DocuSign had lost 6.16% to reach $64.47 in the premarket session on Tuesday.

Next: DocuSign Lets Go Of 10% Of It's Workforce