uploads/2020/06/shaking-hands-3464041_1280.jpg

DocuSign to Replace United Airlines on the NASDAQ-100

By

Updated

On Monday, DocuSign (NASDAQ:DOCU) stock rose 8.0% and closed at $162.69. The shares rose after reports that DocuSign will replace United Airlines (NYSE:UAL) on the Nasdaq-100 Index on June 22. DocuSign stock reached a new 52-week high on Monday.

According to a CNBC report, DocuSign “will join cloud companies Adobe, Workday and Zoom Video Communications on the index, reflecting the rise of cloud services as companies opt for systems they don’t need to operate on their own data center infrastructure.”

The e-signature software company will be included in the Nasdaq-100 Index at a time when its business has been benefiting from the COVID-19 pandemic. With work-from-home orders, many people have shifted to digitally signing documents instead of paper or manual-based processes.

DocuSign’s earnings results for Q1 2021

In the first quarter of fiscal 2021, which ended in April, DocuSign reported an adjusted EPS of $0.12 compared to $0.07 in the same period last year. The earnings beat analysts’ consensus estimate of $0.10 per share. DocuSign generated sales of $297.02 million—a growth of 38.8% from the first quarter of fiscal 2020. The e-signature software company beat analysts’ consensus sales expectation of $281.1 million. In the first quarter of fiscal 2021, DocuSign’s subscription sales rose 39.4% YoY (year-over-year) to $280.9 million.

In the first-quarter earnings release, DocuSign CEO Dan Springer said, “Our strong first quarter results reflect our ability to help organizations accelerate their digital transformation as they adapt to the changing business environment, magnified by COVID-19. Many are taking their first steps with us, while others are expanding their initiatives.” Springer also said, “Led by eSignature, our Agreement Cloud offerings are not only helping customers carry on with business in this time of crisis, but will continue to deliver value as the world emerges from it.”

Financial outlook

In the second quarter of fiscal 2021, DocuSign expects its total revenues to be between $316 million and $320 million. The company expects its subscription revenues to be between $298 million and $302 million.

For fiscal 2021, DocuSign expects its total revenues to be between $1.313 billion and $1.317 billion. The company expects its subscription revenues to be between $1.243 billion and $1.247 billion.

Wall Street analysts expect DocuSign to report an adjusted EPS of $0.08 on revenue of $318.5 million in the second quarter. Analysts also expect DocuSign’s revenues to rise by 35.2% YoY in fiscal 2021 to $1.32 billion. The sales could rise by 28.2% YoY in fiscal 2022 to $1.69 billion. Meanwhile, the adjusted earnings will likely surge 54.8% YoY in fiscal 2021 to $0.48 per share. However, the profits could rise by 75.0% YoY to $0.84 per share in fiscal 2022.

Analysts’ recommendations for DocuSign

Among the 15 analysts following DocuSign stock, nine recommend a “buy,” while six recommend a “hold.” None of the analysts recommend a “sell.” Wall Street analysts’ mean target price on the stock is $152.71, which implies a 6.1% loss from the current level of $162.69. The consensus target price for the stock has risen from $90.46 in May—a growth of 68.8%.

Many analysts revised their target price for DocuSign stock after its first-quarter results on June 4.

  • J.P. Morgan increased its target price from $90 to $150.
  • RBC Capital increased its target price from $150 to $170.
  • D.A. Davidson increased its target price from $90 to $161.
  • Citigroup increased its target price from $150 to $168.
  • Evercore ISI increased its target price from $94 to $145.
  • Wedbush increased its target price from $140 to $165.
  • Deutsche Bank increased its target price from $90 to $160.

Stock returns

DocuSign’s stock price has risen by 11.0% in the trailing five-day period, while it has risen by 220.4% in the trailing 12-month period. The stock is trading 0.6% below its 52-week high of $163.70 on Monday. The stock was also trading 277.2% above its 52-week low of $43.13 on August 14, 2019. On a YTD (year-to-date) basis, the stock has risen by 119.5% as of Monday.

Based on the closing price on Monday, DocuSign stock was trading 16.7% above its 20-day moving average of $139.43. The stock is also trading 37.3% above its 50-day moving average of $118.53 and 61.9% above its 100-day moving average of $100.47. DocuSign’s 14-day RSI (relative strength index) number is 76. The 14-day RSI number indicates that the stock is overbought.

DocuSign stock has a middle Bollinger Band level of $139.43, while its lower Bollinger Band level is $118.88. On Monday, the stock closed near its upper Bollinger Band level of $159.98, which indicates that it’s overbought.

DocuSign competes with Adobe’s Adobe Sign (NASDAQ:ADBE) and Dropbox’s (NASDAQ:DBX) HelloSign. On Monday, Adobe and Dropbox stocks returned -1.3% and 2.3%, respectively. Meanwhile, the Dow Jones Industrial Average rose by 158 points or 0.62%. The S&P 500 and the Nasdaq Composite rose 0.83% and 1.43%, respectively.

Read DocuSign Posts Upbeat Q1 Results, Strong Outlook to learn more.

More From Market Realist