DocuSign Inc (NASDAQ: DOCU) has been thoroughly brutal for the shareholders this year, now down more than 55% versus the start of 2022. Still, a Piper Sandler analyst warns the pain is far from over yet.
Docusign stock could be worth $54 only
On Thursday, Rob Owens downgraded the stock to “underweight” and lowered his price objective to $54 that translates to another 20% downside from here.
The analyst sees continued “execution risks” ahead, after Dan Springer stepped down as the CEO of the eSignature company last month. In a note to clients, he said:
While a leadership change is likely necessary to achieve the balanced, longer-term growth and profitability profile, we believe this adds further to execution risk over the next few quarters at least.
The Nasdaq-listed firm is presently in search of a new chief executive. In the meantime, Maggie Wilderotter (Chairman of the Board) is serving as the interim CEO.
Docusign doesn’t have much in the name of visibility
In June, DocuSign lowered its outlook for “billings” that confirmed the visibility was still “cloudy”.
Owens disapproves of the stock also on “relative” weakness. DocuSign attributes much of its poor performance to a more challenging macro environment and the post-pandemic slowdown in demand. Yet, peers like Adobe, continue to be way more resilient.
Commentary from ADBE and deteriorating macro indicate DOCU is facing both execution and market challenges, which add to overall risk profile, [and] contribute to a challenging backdrop for potential revenue reacceleration in near-term.
Employee turnover was among other reasons cited for the bearish view. Salvation for the San Francisco-headquartered company, the analyst concluded, lies only in a “takeout”.
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