By Senad Karaahmetovic
Wolfe Research analyst Alex Zukin downgraded DocuSign (NASDAQ:DOCU) to Underperform from Peer Perform with a $50.00 per share price target, down from $75.00.
The analyst cut the rating on DOCU stock after “mixed” Q1 results and slashed FY23 billings guidance.
“While 1Q billings beat by more than the prior two quarters, guidance on billings for next quarter of ~1% and 7% for the year, leads to single digit growth in CY23 in our model. With the stock primarily trading on a revenue multiple, we view growth degradation of this magnitude as concerning particularly given incremental personnel and macro changes,” Zukin told clients.
Moreover, the analyst doesn’t believe that numbers “have been fully de-risked,” while there is also no support from FCF or M&A at current levels.
“Our thesis is that we are now three quarters in and sales execution has gotten worse not better, and only at the beginning of incremental macro deterioration. Additionally, we believe that DOCU only layered in a modest amount of macro-related headwinds into their reiterated guide (as macro did not manifest in F1Q), which lowers our confidence further in out year numbers and multiples as incremental risk is to the downside,” Zukin added.
DOCU shares were down over 6% in pre-market today.