DocuSign Falls on RBC Downgrade to Sector Perform on Challenging Short-Term Setup
2022.08.22 16:54
DocuSign Falls on RBC Downgrade to Sector Perform on Challenging Short-Term Setup
By Senad Karaahmetovic
An analyst from RBC downgraded shares of DocuSign (NASDAQ:DOCU) to Sector Perform from Outperform with a $65 per share price target (down from $80).
The analyst based his downgrade on four key elements:
- A long path to turnaround, which is effectively on hold without a CEO;
- Execution issues and high employee turnover reduce confidence in numbers;
- Tough near-term setup as FY24 numbers likely need to come down; and
- DocuSign needs to build credibility with investors, making a turnaround tough to get behind.
The analyst remains positive on DOCU in the long-term, especially bearing in mind the company’s total addressable market (TAM), but he sees shares “range-bound until evidence of a successful turnaround and reacceleration.”
On the potential business sales, he added that a $20 billion check “would be tough to write for both private equity and strategic buyers, making a sale somewhat less likely now.”
At current levels, shares are “fairly valued,” the analyst concluded.
DOCU stock is down 3.8% in premarket Monday.
