RBC Capital Markets downgrades DocuSign, cites need for investor credibility

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RBC Capital Markets downgraded DocuSign on Monday, citing the need for the software company to “build credibility with investors.” Analyst Rishi Jaluria lowered his rating to sector perform from outperform and lowered his price target to $65 from $80, noting that while there is a “long path” to a turnaround, the company has a number of issues facing it. Jaluria noted that DocuSign’s recent stock price decline is due in part to the company’s need to build investor confidence. He said that while there is potential for a turnaround, the company has several challenges that it needs to address. Do you think this will affect DOCUSIGN($NASDAQ:DOCU) market and earnings in the long term? It is difficult to say how this will affect DocuSign in the long term. However, in the short term, it is likely that the company’s stock price will continue to fluctuate as investors try to assess the company’s prospects.

Share Price

The stock opened at $63.2 and closed at $63.1. DocuSign has been under pressure recently as investors question the company’s ability to sustain its current growth rate.

VI Analysis

Companies with strong fundamentals are typically those with long-term potential. The VI app makes it easy to assess a company’s fundamentals and identify potential red flags. According to the VI Star Chart, DOCUSIGN is classified as a “cheetah” a type of company that has achieved high revenue or earnings growth, but is considered less stable due to lower profitability. High growth companies are deemed more volatile as they attempt to grow faster. DOCUSIGN has an intermediate health score of 6/10 with regard to its cashflows and debt, which suggests that it is likely to be able to sustain future operations in times of crisis. However, the company is weak in terms of dividend and profitability.

Summary

“We are downgrading DOCU to Underperform from Sector Perform as we believe the company will have a more difficult time regaining investor confidence following a string of bad news,” the firm said in a note to clients. The news sent DocuSign’s stock price down sharply on Monday.