DocuSign’s Stock (DOCU) Making New High as Earnings Outlook Improves

DocuSign's stock (NASDAQ: DOCU) is up big in the pre-market session, with earnings pushing DOCU 15.3% higher this morning, and on course for new 52 week highs at $96.80. During earnings, the company's announcement to increase its 2025 revenue forecast to $2.96 billion pushed sentiment higher after the last 12 months had already delivered an appreciation of 76.69% in the stock.

The outlook hike was supported by strong numbers in the recent quarter, making DocuSign hit on multiple aspects.

DocuSign reported a 7.8% increase in its third-quarter revenue, reaching $754.82 million, which was above the $745.33 million expected on the street. This strong performance was also supported by an adjusted earnings per share beat at $0.90 (against expectations of $0.87), alongside a free cash flow of $210.7 million, both surpassing analyst expectations. An 8.7% year-over-year rise in billings, reflecting its steady growth momentum and rounded off what was an impressive period for the company.

Along with the release, DocuSign CEO Allan Thygesen outlined the progress the company is making with AI as he spoke about their Intelligent Agreement Management platform.

“In Q3, early IAM momentum outpaced expectations, and we continued to drive improvement in our core business with strong revenue growth and operating profit”

Operationally, DocuSign continues to lead the market for electronic signatures, a position bolstered by the increasing adoption of digital transaction management solutions. The market is highly competitive, with key competitors such as Adobe Acrobat Sign, Dropbox Sign, PandaDoc, and SignNow intensifying the competition. Nevertheless, market dynamics are favorable, driven by the adoption of cloud-based solutions, AI integration, regulatory shifts, and mobile-first approaches.

Despite these encouraging figures, analyst recommendations for DocuSign remain mixed. The stock has received notable upgrades in recent days leading into earnings, but the figures are struggling to keep pace with the current momentum.

JP Morgan increased their target from $50 to $70 (UnderWeight rating), Jefferies hiked from $80 to $95 (Buy rating), and JMP Securities boosted their number from $84 to a street high $108 with an Outperform rating. The average price target a slither under $72 remains significantly behind the indicative open, so we will have to wait and see how analysts react to the new outlook.