IBD Stock Analysis
- Shares broke out of a flat-base buy point of 310.61 on Friday
- Stock tested the buy point Aug. 10, when it hit high of 314.76
- Now on several watchlists; holds perfect Composite Rating of 99
Industry Group Ranking
* Not real-time data. All data shown was captured at
2:05PM EDT on
The San Francisco-based company late Thursday said it earned an adjusted 47 cents a share on sales of $511.8 million in its fiscal second quarter ended July 31. Analysts expected DocuSign earnings of 40 cents a share on sales of $488.7 million. On a year-over-year basis, earnings soared 176% while sales jumped 50%.
For its current quarter ending Oct. 31, DocuSign forecast revenue of $529 million at the midpoint of its outlook. Analysts had projected sales of $522 million. Sales in the year-earlier period were $382.9 million.
DocuSign’s electronic-signatures offering has helped companies during the remote work environment spurred by the Covid-19 pandemic, Chief Executive Dan Springer said in a news release.
DocuSign Shifting Contracts Online
“Organizations of all types and sizes are leveraging the power of the (DocuSign) Agreement Cloud to digitize the most foundational process of doing business — the agreement process — starting with eSignature,” Springer said. “In partnership with our customers, we are eliminating paper, automating end-to-end agreement processes, and enabling better experiences in the anywhere economy.”
The company’s software automates the filing of contracts over the internet and certifies electronic signatures.
On the stock market today, DOCU stock jumped 5.3% to close at 310.05.
DOCU Stock Breaks Out
On Friday, DOCU stock broke out of a flat base at a buy point of 310.61, according to IBD MarketSmith charts, then slipped just below that point. Shares tested that buy point on Aug. 10 when DOCU stock reached a record high 314.76. But trading volume was well below average and shares reversed, ending the day down 1.7%.
Strong Growth Post-Covid Peak
Several Wall Street analysts noted that DocuSign continues to show strong growth even after the peak Covid period.
“DocuSign posted further evidence that while it benefited during the pandemic, it has a long tail of sustainable growth,” UBS analyst Karl Keirstead said in a note to clients. He kept his buy rating on DOCU stock and raised his price target to 350 from 340.
DocuSign is becoming a “virtual contract management juggernaut,” Wedbush Securities analyst Daniel Ives said in a note to clients. He reiterated his outperform rating on DOCU stock with a price target of 340.
Corporate tech buyers are prioritizing DocuSign’s e-signature platform and solution set, Ives said. Its products service a clear need for remote workers, he said.
“With a ‘new normal’ and still heavy remote workforce on the horizon for the foreseeable future, we believe this backdrop has markedly accelerated DocuSign’s ability to further penetrate existing as well as new customers,” Ives said.
DOCU Stock On Five Watchlists
DOCU stock is tied for first place with Concentrix (CNXC) among 106 stocks in IBD’s enterprise software industry group.
DocuSign and Concentrix each have a best-possible IBD Composite Rating of 99. The Composite Rating scores a stock’s key growth metrics against all other stocks regardless of industry group.
Follow Patrick Seitz on Twitter at @IBD_PSeitz for more stories on consumer technology, software and semiconductor stocks.
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