Some analysts are losing faith in DocuSign after the e-signature company posted disappointing quarterly results that showed signs of a slowdown in its business. Shares of DocuSign benefited during the pandemic as more consumers shifted to online transactions, but have fallen nearly 43% since the start of the year. Evercore ISI’s Kirk Materne downgraded the stock to outperform, saying in a note to clients that he sees better payouts in other stocks and minimal upside to DocuSign. “Not a huge fan of the aftermath of the EPS downgrade and while DOCU shares are probably close to the bottom at current levels, if one is taking a longer-term view, we believe the difficult comparisons and continued execution challenges / business makes sense in the region. Meaningful rebound in billing growth still exceeds our expectation,” Matteron wrote. DocuSign said it expects 7% to 8% year-over-year billing growth for the year. He added, “We believe unless billing accelerates above 20%, the margin guide will be extended to investors to offset the decline in revenue at 20%+ op. margin for FY24. Outlook needs to be indicated.” Materne lowered the firm’s price target on the stock from $100 per share to $75, down 14% from Thursday’s close. Bank of America’s Brad Sills downgraded DocuSign to neutral, citing a disappointing billing outlook. The bank’s previous buy rating had forecast billing growth in the mid-teens for the 2023 fiscal year. He said the growth prospects would not come close to that until the second half of the 2024 fiscal year. Meanwhile, William Blair’s Jake Robert downgraded the company for market performance, noting that “customers are not churning out the platform, with DocuSign noticing that many customers are reducing their consumption of the platform from the peaks of the pandemic.” As their contracts come up for renewal. As a result of the headwinds DocuSign is seeing in the business, management plans to reduce its hiring targets for the year to focus on profitability.” Shares of DocuSign lost nearly 27% in premarket trading. — CNBC’s Michael Bloom contributed reporting
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