DocuSign’s (NASDAQ:DOCU) shareholders already had to deal with the sudden exit of CEO Dan Springer in June. Making matters worse, RBC analyst Rishi Jaluria just downgraded DOCU stock while also lowering his price target on the shares.
DocuSign was red-hot on Wall Street soon after the Covid-19 pandemic took hold in 2020. Remote signature software was in demand, and DocuSign’s early investors enjoyed powerful profits — for a while, at least.
If they didn’t book their gains at the right time, some DOCU stock holders are deep in the red now. The early pandemic catalyst isn’t moving the share price higher like it once did. Springer’s sudden summertime departure certainly didn’t bolster the shareholders’ confidence, either.
On top of all that, it just came out this morning that Jaluria downgraded DocuSign from “outperform” to “sector perform.” Furthermore, the RBC analyst slashed his price target on DocuSign shares from $80 to $65.
What’s Happening with DOCU Stock?
To put this downgrade into context, consider that today, DOCU stock is trading near $63. So, a $65 price target isn’t very optimistic. Moreover, the shares were down 4% in early trading today. This suggests investors may be concerned about Jaluria’s downgrade and price target reduction.
This isn’t to say Jaluria is entirely bearish on DocuSign. He reportedly believes in “the long-term thesis for DocuSign” and sees “a path to accelerating growth.” However, the analyst claims this path “requires better sales execution” and “new use cases,” among other things.
Also, Jaluria doesn’t expect DocuSign to demonstrate growth in the immediate term. Indeed, this process will “take time,” possibly even
“several quarters, even after a new CEO joins, before we start to see signs of a successful turnaround.”
In other words, DocuSign will be a show-me story until proven otherwise. With this cautious assessment in mind, today’s traders are definitely leaning bearish on DOCU stock.
On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
