JPMorgan downgrades DocuSign to Underweight on deteriorating trends

JPMorgan analyst Mark Murphy downgraded DocuSign to Underweight from Neutral with a price target of $48, down from $58. After providing a preliminary fiscal 2024 outlook during its Q3 earnings call that investors likely viewed as conservative and setting an achievable growth bar, DocuSign provided full year guidance that "falls a bit short" on sales and the margin guidance does not seem to allow for much of the recent headcount reductions to flow through, the analyst tells investors in a research note. The firm says the combination of deteriorating demand trends, the "clear competitive presence" of Adobe and likelihood of emerging competition from Microsoft, the CFO departure, exposure to challenged end-markets in real estate and peers that trade at materially lower multiples "seem to tilt the risk/reward profile downward" for DocuSign shares.