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DocuSign Remains Under Pressure After Disappointing Report

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·2 min read
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Key Insights

  • DocuSign has recently reported its fiscal first quarter results, missing analyst estimates on earnings. 

  • Analysts rushed to downgrade the stock, putting additional pressure on DocuSign shares. 

  • The stock has lost 80% of its value from all-time high levels but trades at 30 forward P/E, which is not cheap. 

DocuSign Falls After Another Analyst Downgrade

Shares of DocuSign gained additional downside momentum after Wolfe Research downgraded the stock.

On Friday, DocuSign stock suffered a big hit after the company released its quarterly report. The company reported revenue of $589 million and adjusted earnings of $0.38 per share, beating analyst estimates on revenue and missing them on earnings. In the next fiscal quarter, DocuSign expects to report revenue of $600 million – $604 million.

The weak report and disappointing guidance serve as significant bearish catalysts for DocuSign stock, which is trading at levels that were last seen back in September 2019.

What’s Next For DocuSign Stock?

Analyst estimates for DocuSign have been moving lower in recent months. Currently, the company is expected to report earnings of $1.75 per share in the current fiscal year and earnings of $2.01 per share in the next fiscal year, so the stock is trading at 30 forward P/E.

Such valuation levels are expensive for companies that face slower growth. In addition, the market is worried about Fed’s rate hikes. Falling earnings estimates and rising Treasury yields will continue to put pressure on DocuSign shares in the upcoming weeks.

In this light, it remains to be seen whether speculative traders will be ready to buy DocuSign shares at current levels. The company’s valuation remains expensive, and there is a significant potential for multiple contraction.

The stock has lost roughly 80% of its value from the highs that were reached back in September 2021, but it does not look cheap.

To keep up with the latest earnings updates, visit our earnings calendar.

This article was originally posted on FX Empire

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