DocuSign (DOCU 3.59%) reported better-than-expected results late last week that went a long way toward convincing investors that the business is on firmer ground. Wall Street is chiming in with its own encouraging words on Monday, helping to push the shares up 3% as of 1 p.m. ET.
Stabilizing growth and improving profitability
DocuSign’s e-signatures had their moment during their pandemic, and the stock soared higher as a result. But those growth rates weren’t sustainable, and the shares today are 80% below the highs hit as recently as 2021.
The company was rumored to be considering buyouts in recent months, but the deal talk has faded lately.
DocuSign’s fourth-quarter results helped reassure investors that there is still a quality business here. The company beat consensus revenue and earnings-per-share estimates and said it saw solid momentum heading into 2024.
On Monday, Citigroup analyst Tyler Radke raised his price target on DocuSign to $93 from $90 and kept a buy rating. The analyst praised what he called a “very solid beat/raise” quarter and said he saw further signs of stabilizing growth trends and improving profitability.
Baird kept a neutral rating on the shares but raised its price target to $65 from $50.
Is DocuSign a buy in 2024?
DocuSign appears poised to head higher from here. But whether the stock goes high enough to make it a buy depends on the perspective of the individual investor. Radke’s revised price target is more than 60% above the stock’s current price, yet less than one-third of the levels DocuSign shares reached a few years ago.
For all the good in the latest report, there was nothing to suggest a return to the pandemic go-go tech stock days of just a few years ago. Investors buying in today need to temper their expectations.
Citigroup is an advertising partner of The Ascent, a Motley Fool company. Lou Whiteman has positions in DocuSign. The Motley Fool has positions in and recommends DocuSign. The Motley Fool has a disclosure policy.
