Docusign Stock Continues To Climb!

“Weekly Options” Members Profit Up 274%!
More Growth Expected!

Sunday, July 25, 2021

by Ian Harvey

Docusign stock has been on a bull-run this summer, climbing 12% higher in the month of July alone, and providing members with a potential profit of 274% with a weekly options trade.

The digital signature market is dominated by DOCU, with roughly 70% of the USD 25 billion market. Digitization is only becoming more integrated into the lives of consumers and businesses alike and could gain even more traction, which stands to benefit DOCU even further.

The stock price is likely to continue increasing for the foreseen future.

1. Docusign Contracts and Revenue.....

One of the other key factors about DocuSign, is 88 percent of its revenue comes from its enterprise and commercial customers. These are large corporate customers businesses that have multiple employees, probably in multiple locations. Customers close to doubled over the past couple of years.

The dollar-weighted contract average length is about 18 months. Most contracts are under 12 months or at 12 months, and then about a third of them are over 12 months. One of the things that could play out is as envelopes are used up, that's something that DocuSign knows, because this is cloud software, so that gives the salesperson an opportunity to come back a couple of months later, 3, 6, 9 months before the contract is up; which provides them an opportunity to come back and talk to them about upping their contract volume, or even upping it from a functionality standpoint.

There are many companies that are in their first contract, and their first time they've estimated the envelopes. The other thing that happens, is look at this net dollar retention, which is just going up over time and this is really impacted by larger companies signing on the DocuSign, and realizing the benefits across their organization for more use cases and more departments, and potentially even integrating it into existing infrastructure and process workflows.

2. Customer Growth.....

Enterprise and commercial revenue makes up 88% of the business.

Total customers are 988,000, almost 1 million customers. Interestingly enough, only 14% of its customers are enterprise in commercial, but they make up 88% of the revenue.

DocuSign manages contracts from beginning to end, and executing them in a corporate environment. This second act for DocuSign is really focused on its corporate customer and digitizing and making contracts like a living piece of software versus just a piece of paper. That's all about corporate customers.

Almost every single department across the enterprise has agreement as part of their doing business.

3. Inflationary Considerations.....

Inflation has crept up above 3% for the first time in over a decade.

The rolling four-quarter revenue growth year-over-year is accelerating. Inflationary periods now kick in and the salesperson comes back and says, hey, you need to renegotiate your contract and it has gone up by five percent or went up by seven percent. There is no way the company is going to say, well, we're not using the product as much as we thought we can get by on paper signatures. Nobody is going to say that; therefore, DocuSign is well set up, in any environment going forward even in an inflationary period.

4. Untapped Market.....

DocuSign has been on a roll with its flagship e-signature software as businesses scrambled to adapt to remote working environments. But this e-signature specialist has much more available to customers to enhance the overall agreement process. This is a huge untapped market opportunity for the company.

Docusign received a leader ranking from Gartner for its contract management project. This is the second year in a row that DocuSign has been ranked as a leader. This year, it placed highest among 15 vendors related on the "ability to execute axis" and it ranked highly on the "completeness of vision" axis.

Why does this matter? E-signature is really just the ticket to entry for this tech subscription company. Once customers are in doing this e-signature thing, they're looking to see what other benefits this software can bring. The market for this cloud opportunity beyond e-signature is just as big as the e-signature market. The software that it has enables companies to do more with their contracts. Think about how contracts are handled today. Almost any department can sign a contract, whether it's for their property maintenance or for legal services or development services, or even freelancers. These end up getting shared all over the company in shared drives, Word docs, PDF files, maybe even paper storage.

The e-signature market is $26 billion. This is essentially annual revenue that is there for an opportunity. Notary and identification services, $4 billion. This broader Cloud agreement, $17 billion, and then, just the contracts platform overall is $3 billion. These three on the bottom, they've not released any progress against these, partly because this e-signature business has been growing so fast for them. This company has got a ton of opportunity ahead of itself.

5. Return to Normalcy.....

The U.S. government is looking at this Independence Day weekend to largely mark the country’s return to normalcy after over a year of disruption by the Covid-19 pandemic. About 46% of the U.S. population is now fully vaccinated, per the U.S. CDC and mask mandates have also largely been lifted for vaccinated people, signaling the government’s confidence in the recovery.

Companies are likely to adopt a hybrid working model post the pandemic giving employees some flexibility to work remotely. Moreover, with the broader trend of greater digitization, those software companies which are focused on connectivity, collaboration, and cybersecurity, should stand to benefit. And, DocuSign, a company focused on e-signature solutions, has been the strongest performer, with its stock rising by 25% year-to-date.

The trend of working from home appears to be here to stay even post the pandemic, as companies look to cut costs, access a larger base of talent, and give employees more flexibility. This should ensure that demand holds up in the long-term.

5. Analysts’ Opinions.....

Wedbush raised their price objective on DocuSign from $260.00 to $290.00 and gave the stock an “outperform” rating in a research note on Friday, June 18th.

DOCU has also been the subject of a number of research reports.....

• TheStreet upgraded DocuSign from a "d" rating to a "c-" rating in a research report on Thursday, June 3rd.
• Morgan Stanley increased their price target on DocuSign from $290.00 to $295.00 and gave the company an “overweight” rating in a research note on Friday, June 4th.
• Bank of America reaffirmed a "buy" rating and issued a $250.00 target price on shares of DocuSign in a report on Wednesday, April 14th.
• Oppenheimer lowered their target price on DocuSign from $300.00 to $260.00 and set an "outperform" rating for the company in a report on Friday, June 4th.
• Finally, Royal Bank of Canada started coverage on DocuSign in a research note on Friday, June 11th. They set an “outperform” rating for the company.

20 Wall Street analysts have issued ratings and price targets for DocuSign in the last 12 months. Their average twelve-month price target is $272.29, predicting that the stock has a possible downside of 2.34%, or that analysts will be looking to re-assess their calls. The high price target for DOCU is $325.00 and the low price target for DOCU is $215.00. There are currently 3 hold ratings and 17 buy ratings for the stock, resulting in a consensus rating of "Buy."