Opinions
John Zechner
Docusign
DOCU-Q
HOLD
Apr 29, 2024
$57.100
Stock price when the opinion was issued
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BUY ON WEAKNESS
Downgraded a lot today BOA downgraded it to a sell today, but he added to his holdings today. It's down 80% from its pandemic highs, but its products are everywhere. Not a great investment, sure, but DOCU is an essential part of any business that already uses it, and businesses rarely change their service systems. Also, companies and countries are reacting to the Russian invasion of Ukraine--they're asking, in which country is my data residing? He's in pain, but is averaging down. DOCU is a long-term bet. He's known the management since they were private--he's confident DOCU can pivot. He projects double-digit returns in 18 months.
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BUY ON WEAKNESS
Allan Tong’s Discover Picks Taking a step back, DOCU revenues have climbed from $250 million in 2016 to $2.1 billion in its last fiscal year. Meanwhile, cash levels are rising. Flashforward to last week's report in which EPS clocked in at $0.44. That was actually down 6% from a year ago, but higher than the expected $0.42. Also impressing the street were revenues of $622.2 million beating $602 million (a 22% increase YOY). The company issued a rosy forecast of $626 million in revenues vs. the street's $625 million. Read 2 Big Technology Stocks That Are Back for our full analysis.
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STRONG BUY
Their Q2 earnings beat. A pandemic darling that then crashed. But now it trades at a fair valuation and strong free cash flow. She bought it last September is up 35%. Trades at 16x PE and has a 8% free cash flow yield. Great managers who underpromise, so they will beat their quarter. Has real secular growth.
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It has maxed out to a large degree on the growth side. It is still dominant in the space and could be an acquisition target.