The picture these days doesn’t look good for information technology stock DocuSign (NASDAQ:DOCU). At least, not by Citi’s reckoning. A new analyst note out from the firm suggests that DocuSign has some high points and low points ahead of its fourth quarter earnings results on Wednesday, and investors don’t much like what they hear either. DocuSign was down modestly in Monday afternoon’s trading.
The good news for DocuSign, based on the note Citi released, was that its projections in the short term “…look achievable.” Sadly, that’s about where the good news ended, as Citi’s note declared growth inputs to be “soft” and that there are more troubles for DocuSign from there. There are many more competitors in the market space than there were previously as more companies look to find a way to allow people to sign documents online.
Further, there are signs that DocuSign’s web traffic is on the decline, a move that won’t give it a lot of boost in the field. DocuSign is actively looking at cost cutting, including firing 6% of its employees, but is set to take $28 million to $32 million in “restructuring charges.”
Looking for New Revenue
DocuSign’s attempts to find new revenue streams aren’t doing it many favors. It’s poised to put user data to work in an increasingly popular field: training AI large language models. While DocuSign has offered some protections regarding privacy, the assurances that users will be asked permission before that data is used rings hollow for at least some analysts out there. That’s a bad sign; if there are plenty of competitors in the market, and DocuSign’s users disapprove of having their data used, then DocuSign is likely to lose to those competitors.
What Is the Target Price for DocuSign Stock?
Turning to Wall Street, analysts have a Hold consensus rating on DOCU stock based on four Buys, 11 Holds, and three Sells assigned in the past three months, as indicated by the graphic below. After a 16.06% loss in its share price over the past year, the average DOCU price target of $58.80 per share implies 9.11% upside potential.
