Docusign Inc. (NASDAQ:DOCU) drew bullish commentary from analysts after its fiscal second-quarter results showed accelerating growth in its Intelligent Agreement Management business (IAM), improving retention and stronger-than-expected profitability.
Citizens Sees More Upside
Citizens analyst Patrick Walravens maintained a Market Outperform rating and an $86 price forecast.
The analyst highlighted Docusign’s 9.4% revenue growth, improving net retention, and IAM annual recurring revenue of about $529 million. IAM accounted for 15.1% of total ARR, ahead of Citizens’ $474 million estimate.
Walravens said Docusign is using its dominant e-signature position to become the “agreement layer” across enterprises. He expects IAM ARR to exceed $650 million by the end of fiscal 2027 and account for roughly 18.5% of total ARR.
Citizens also pointed to Docusign’s Iris AI engine, which is trained on more than 300 million private, consented agreements, as a potential competitive advantage.
The firm raised its fiscal 2027 non-GAAP earnings estimate to $4.67 per share from $4.61. It also lifted its fiscal 2028 estimate to $5.22 from $5.12.
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RBC Says Valuation Caps Upside
RBC Capital Markets analyst Rishi Jaluria took a more measured view. The firm maintained its Sector Perform rating but raised its price forecast to $70 from $55 following Docusign’s results.
Jaluria said the quarter marked another solid step in Docusign’s transition toward IAM. Revenue reached $875.7 million, up 9% year over year, while non-GAAP earnings came in at $1.16 per share. Both topped consensus estimates.
RBC highlighted improving retention and larger customer deals. Customers generating more than $300,000 in annual contract value rose 14% year over year to 1,296, marking the second straight quarter of double-digit growth.
The firm also sees an opportunity in Docusign’s growing integrations with third-party AI platforms. Its connectors span platforms from OpenAI, Anthropic and Microsoft Copilot to Google Cloud and Perplexity. RBC believes those integrations could eventually become a distribution channel for Docusign.
Still, RBC said the shares appear fully valued. The firm noted that Docusign trades at roughly nine times estimated calendar 2027 free cash flow, limiting potential upside despite improving IAM adoption, retention and deal sizes.
The analysts’ differing ratings reflect a common theme: Docusign’s IAM strategy is gaining traction, but the debate is shifting toward how much of that improvement is already reflected in the stock.
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DOCU Price Action: Docusign shares were up 3.54% to $68.30 at the time of publication on Friday, according to Benzinga Pro data.
Photo via Shutterstock
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