Breaking News
Get Actionable Insights with InvestingPro+: Start 7 Day FREE Trial Register here
Investing Pro 0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

Growth Investing: Is There More Upside To DocuSign Stock After Its 200% Rally?

By Haris Anwar/Investing.comStock MarketsMar 18, 2021 10:00AM ET
www.investing.com/analysis/growth-investing-is-there-more-upside-to-docusign-stock-after-its-200-rally-200567974
Growth Investing: Is There More Upside To DocuSign Stock After Its 200% Rally?
By Haris Anwar/Investing.com   |  Mar 18, 2021 10:00AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 

It's been a tough ride in 2021 for many growth companies that saw their share prices soar during the pandemic. One example: e-signature company DocuSign (NASDAQ:DOCU). Its stock has been trading in a range since it hit a record high in September. 

The San Francisco-based application software business experienced explosive growth for its digital services as the shift to remote work and social distancing prompted companies to seek digital signatures and manage their contracts electronically.

These trends contributed to DocuSign being among Wall Street’s biggest 2020 success stories, behind Zoom Video (NASDAQ:ZM), Tesla (NASDAQ:TSLA) and Moderna (NASDAQ:MRNA). Even with a drop of more than 20% from a record close of just under $269 per share set at the start of September, DocuSign stock is still 192% higher during the past year. Shares closed Wednesday at $213.34, up about 1% on the day.

DocuSign Weekly Chart.
DocuSign Weekly Chart.

One dilemma for investors interested in these new technology stocks is whether they will be able to sustain their growth momentum once the pandemic is contained and businesses start operating normally. The nature of DocuSign products suggest that it has a lot of post-pandemic growth ahead.

DocuSign's success during the pandemic offers strong evidence that its products have a permanent place in an economy fast shifting to digital. The company offers individual e-signature plans starting at $10 per month up to enterprise-level packages for large companies. 

$50-Billion Market 

DocuSign tools enable companies to manage the end-to-end agreement process digitally, from initial drafts to executing the contract and managing it after signing. Its Agreement Cloud suite also allows clients to use its artificial intelligence capabilities to examine contracts to identify issues, assess risk and build smart purpose-built contracts from scratch. 

According to the company’s CEO Dan Springer, DocuSign is still in its early stage of growth in what he predicts is a $50-billion addressable market.

In a statement last week he said: 

“Fiscal 2021 was a milestone year for DocuSign. We became a pillar of the 'anywhere economy' that lets people increasingly do anything in life and work from anywhere, In the process, we grew our business nearly 50%, reached almost $1.5 billion in revenues and achieved a record net retention rate of 123%. We believe this performance represents an acceleration of the ongoing trend towards the digital transformation of agreements."

DocuSign topped revenue and earnings expectations for its latest quarter, while delivering a better-than-expected outlook on those metrics. The company reported a fiscal fourth-quarter adjusted profit of $0.37 a share on March 11, up from $0.12 cents a share a year prior. Revenue for the quarter rose to $410 million from $258 million.

The company is pushing for growth, particularly overseas, where it currently derives just 21% of its revenue. Its sales from international clients jumped an impressive 83% year-over-year to $89 million in the fourth quarter.

Bottom Line

While it’s not hard to see DocuSign continue to grow after the pandemic, its stock is unlikely to repeat the past year’s performance. A big challenge for high-momentum stocks, like DocuSign, is that investors are avoiding companies that demand a significant valuation premium when interest rates are inching higher.

Perhaps that's the reason analysts don't see much upside this year in DocuSign stock, with their consensus price target remaining close to $280 a share. That said, DocuSign is a good stock to buy and hold in your high-growth portfolio.

Growth Investing: Is There More Upside To DocuSign Stock After Its 200% Rally?
 

Related Articles

Growth Investing: Is There More Upside To DocuSign Stock After Its 200% Rally?

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Comments (1)
Yaqoob GOhhga
Yaqoob GOhhga Mar 18, 2021 1:25PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
yaqoob DEAF
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
or
Sign up with Email