DocuSign (NASDAQ:DOCU) stock closed over 9% higher on January 11 following the rumors of a buyout. Private equity firms, including Bain Capital and Hellman & Friedman, are competing to acquire DocuSign, which provides electronic signature services, Reuters reported
Per the report, Bain Capital and Hellman & Friedman are the two private equity firms that are among the final contenders. The potential deal would mark one of the major leveraged buyouts of 2024. There is also a possibility of a collaboration between these two private equity firms to finalize the agreement. The outcome is expected in the coming weeks. As of the latest closing price, DocuSign’s stock holds a market capitalization of $12.51 billion.
Notably, DocuSign stock has delivered a return of approximately 4.5% over the past year, significantly underperforming the S&P 500’s (SPX) gain of nearly 20%. This underperformance reflects the deceleration in its billings growth rate due to macro headwinds and concerns over the decline in the dollar net retention rate. For instance, DOCU’s billings rose 5% year-over-year in Q3 FY24 compared to a 10% increase in Q2 FY24. Moreover, its dollar net retention was 100% in Q3 FY24, down from 102% and 105% in Q2 FY24 and Q1 FY24, respectively.
Is DocuSign a Buy, Hold, or Sell?
Macro headwinds, the slowdown in DOCU’s billings growth, and concerns over the churn rate continue to pose challenges for the company. This is reflected in analysts’ consensus rating and price target.
DOCU stock has four Buys, 10 Holds, and four Sell recommendations for a Hold consensus rating. Analysts’ average price target of $58.13 indicates 5.25% downside potential from current levels.
