The remote work environment won’t last forever and people are slowly returning to more normalized work routines. But the digitalization of the economy is only going in one direction and the coronavirus helped spur its nearly runaway momentum.
Paper is Dead…
DocuSign DOCU operates a relatively straight forward business in a tech sector full of vague or esoteric endeavors. The firm enables businesses and organizations to sign contracts and documents electronically on “practically any device, from almost anywhere, at any time.”
DOCU’s offerings are increasingly valuable in our tech-focused world where professional services of all shapes and sizes are conducted digitally in one way or another. At a time when banking is done online, hospital records are stored electronically, and mortgage documents are signed digitally, DocuSign appears increasingly valuable.
On top of that, DocuSign’s Agreement Cloud helps firms “automate and connect” their “entire agreement process.” The cloud-based suite offers over a dozen apps for e-signature, document generation, contract lifecycle management, and more. DocuSign also sells industry and department-specific solutions.
DocuSign’s cloud suite has hundreds of pre-built integrations with other applications, including the likes of Microsoft MSFT, Google GOOGL, and Salesforce CRM. And the firm, which went public in late April 2018, boasts over half a million customers around the world.
Investors can see in the nearby chart that DOCU shares have skyrocketed 375% in the last 12 months to destroy some of the names we just mentioned, its industry’s average, and fellow COVID-19 high flyer Zoom Video ZM.
That said, its shares have cooled off in the last month and rest about 6% off its 52-week highs. This could help provide some runway for it to break out if it’s able to impress Wall Street with its second quarter fiscal 2021 results that are due out on Thursday, September 3.
DocuSign back in early June topped our Q1 estimates, with sales up 39% and adjusted earnings up over 70%. “Much of the strong Q1 performance was driven by increased demand for eSignature from organizations that suddenly needed a way to sign and manage agreements from wherever they were,” CEO Dan Springer said in prepared Q1 remarks in early June.
“Typically, eSignature is the first step that many customers take on their broader digital transformation journey with us.”
Our Zacks estimates call for DOCU’s second quarter revenue to jump over 35% to $318.4 million. Meanwhile, it is expected to see its adjusted loss shrink from -$0.31 a share in the year-ago period to -$0.21 in Q2.
This positivity is expected to continue, with its full-year revenue projected to climb 35% this year and another 27.4% higher next year. These estimates follow FY20’s 39% top-line expansion and FY19’s 35%.
DocuSign is also expected to see its adjusted loss shrink both this year and next. And its longer-term earnings outlook has turned far more positive since it reported its first quarter results.
DocuSign earns an “A” grade for Growth in our Style Scores system but is currently a Zacks Rank #3 (Hold), based on its lack of recent earnings revisions.
Some investors might find it best to wait until the firm reports and provides updated guidance before they consider buying. Yet the tech sector, from Apple AAPL to Salesforce, has showcased Wall Street’s willingness to dive deeper into tech for its ability to expand during these rough economic times.
DOCU appears to offer long-term appeal in our digital world. And it’s worth noting that of the 13 brokerage recommendations Zacks has accumulated for DocuSign, eight come in at Strong Buy, with one Buy, and four Holds. Plus, the stock trades at a big discount to Zoom at the moment.
These Stocks Are Poised to Soar Past the Pandemic
The COVID-19 outbreak has shifted consumer behavior dramatically, and a handful of high-tech companies have stepped up to keep America running. Right now, investors in these companies have a shot at serious profits. For example, Zoom jumped 108.5% in less than 4 months while most other stocks were sinking.
Our research shows that 5 cutting-edge stocks could skyrocket from the exponential increase in demand for “stay at home” technologies. This could be one of the biggest buying opportunities of this decade, especially for those who get in early.
See the 5 high-tech stocks now>>
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.