DocuSign (DOCU) had its price-target boosted at RBC Capital Markets on Monday with the electronic documents company continuing to benefit from “favorable trends” that were seen in the second quarter like strong customer activity and new business relationships.
The bank lifted the target to $93 a share, up from $80 and reiterated the outperform rating it has on the stock of the San Francisco-based company, which has a market value of about $12.3 billion.
“Our checks, which we remind investors are anecdotal due to the majority of DocuSign’s business being direct, suggest strong customer activity in F3Q,” RBC analysts Alex Zukin and Matthew Hedberg said in a note. The company’s cloud-based contract management unit, SpringCM, is seen to be performing “ahead of company expectations,” the analysts said.
DocuSign shares were slightly weaker on Monday but have surged almost 75% this year. In September, the firm said its second-quarter revenue jumped 41% year-on-year to $235.6 million, as 29,000 new customers were brought to the platform, to bring the total to 537,000 worldwide.
Last month, DocuSign extended its product offerings that are designed for Salesforce (CRM), including its application called Negotiate that speeds up the process of generating and negotiating deals. “Partners indicate to us that the product represents a meaningful up-sell opportunity to customers of DocuSign for Salesforce,” RBC said.
Talks with partners have also showed that rival Adobe (ADBE) “has been moderately less competitive, with a greater focus on Adobe’s more core markets,” the analysts said. Still, “Adobe represents a deep-pocketed competitor that appears increasingly interested in taking share in the market,” RBC said.
Consensus estimates among analysts are in line with the company’s guidance for the third quarter for revenue of $237 million to $241 million, according to the analysts.