Why Is DocuSign (DOCU) Stock Down 8% Today?

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  • UBS analysts recently downgraded DocuSign (DOCU) stock to “sell.”
  • UBS also envisions substantial downside risk from the current price for shares.
  • DOCU stock is falling more than 8% in early trading today.
DocuSign Stock May Be Overdone, but It's Still a Great Long-Term Buy
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Unfortunately for DocuSign (NASDAQ:DOCU) stock investors, the e-signature company just got downgraded by a group of Wall Street analysts. Not only that, but these analysts evidently foresee DOCU stock losing further value, having also issued a low price target for shares.

“We were on the sidelines and Neutral-rated throughout 2H22 and into 2023,” explained UBS analysts in a recently issued note. However, that was then and this is now. Reportedly, UBS downgraded DocuSign shares from “neutral” to “sell.”

UBS cited valuation concerns as a reason for the downgrade, among other issues. DOCU stock rallied around 54% from its low point in December 2022. Consequently, investors may now view shares of the company as too expensive.

Further, UBS cited DocuSign’s “current CY23/FY24E FCF multiple” of 26 times as problematic. Analysts also pointed to the company’s “fundamentals that if anything have weakened.”

Finally, along with all of that, UBS explained that DocuSign’s “21.2x CY24/FY25E FCF does not look compelling” when compared to Zoom (NASDAQ:ZM) “and other low-growth software peers.”

What’s Happening With DOCU Stock?

DOCU stock is dropping more than 8% today, breaking below $60 this morning as financial traders caught wind of the analyst downgrade. However, shares could possibly lose even more value in the coming months.

UBS analysts assigned a price target of $52 to DocuSign shares, so clearly they are bracing for further downside. Interestingly, the analysts are bearish even though investors responded positively to DocuSign’s announcement last week that the company will implement a 10% workforce reduction.

That reduction is in addition to DocuSign’s 9% headcount cut from September. Some traders may view this as a necessary retrenchment, while others may see it as a sign of financial problems for the company.

Apparently, analysts with UBS see the glass as half-empty, not half-full, when it comes to DocuSign’s near-term future prospects. Now, some traders are taking UBS’ commentary and downgrade to heart, unloading shares of DOCU stock.

On the date of publication, David Moadel did not hold (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.


Article printed from InvestorPlace Media, https://investorplace.com/2023/02/why-is-docusign-docu-stock-down-8-today/.

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