DocuSign, Inc. (DOCU) offers software solutions that include e-signature, document generation, and contract lifecycle management. However, the company’s stock has fallen to about 80% below its peak due to several reasons, such as slowing growth and increased competition from Adobe and other tech companies. Additionally, DocuSign’s earnings revisions have been trending in the wrong direction.
DocuSign’s revenue growth is slowing down as it faces a challenging marketplace, a slowing economy, and greater competition from other larger, more diversified tech companies such as Adobe. DocuSign’s revenue growth dropped to 19% after four years of between 35% to 45% growth following its 2018 IPO. Zacks estimates expect that DocuSign’s revenue will climb 7.3% this year and 8% next year.
DocuSign is attempting to cut costs to improve its bottom line due to slowing revenue expansion. Nonetheless, the company’s technical chart appears worrisome and has slipped about 4% YTD. The most accurate EPS estimate for next year is 7% below the current Zacks consensus, giving it a Zacks Rank #5 (Strong Sell) at the moment.
Although DocuSign still operates a solid business, investors may want to look at other tech stocks that have shown an increase in earnings guidance and participated more heavily in the 2023 comeback. Until there is a material change in DocuSign’s guidance or buyers show up in waves to buy the beaten-down stock, it may be best to stay away from investing in this company.
DocuSign will be releasing its first quarter fiscal 2024 results on Thursday, June 8.
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