August 21, 2019 San Francisco / CA / USA – DocuSign headquarters in SOMA district; DocuSign, Inc. is an American company providing document management services

The DocuSign stock price popped on Friday after the eSignature company reported strong quarterly earnings. DOCU shares rose by more than 15% to $225, which was the highest level since May 3. The jump values the company at more than $39 billion and the stock is still 22% below the highest level in 2020.

DocuSign earnings review

In a report published on Thursday, DocuSign said that its revenue rose by more than 57% year-on-year in the first quarter. The company brought in more than $468 million in revenue and an earnings per share of $0.44. Its international business grew, with its revenue accounting for about 21% of the total revenue. 

The company also saw its number of customers rising in the quarter. In total, it added more than 96k customers, bringing the total to almost 1 million. Its free cash flow also rose to $123 million. Most importantly, the company expects its business to keep growing, with revenue rising to between $479 million and $485 million. For the year, it expects revenue to rise to more than $2 billion.

Is DocuSign stock a buy?

For starters, DocuSign is a market leader in the eSignature industry. Simply said, the company helps other firms replace paper-based signatures with digital ones. 

This is a massive industry that is growing very fast. Estimates put its total addressable market at more than $50 billion. For example, a company in London can easily do a deal with another one in New York without the need for physical meetings. DocuSign competes with companies like Adobe, HelloSign, and Citrix, among others.

Analysts were pleased with DocuSign’s strong quarter. Those at William Blair said that the company’s strong results set the stage for a strong year. Similarly, those at Oppenheimer and Morgan Stanley said that the company was firing on all cylinders. The two firms expect the shares will climb to $300 and $295, respectively.

Other analysts bullish on DocuSign stock are Citigroup, Wedbush, Wells Fargo, and Bank of America. According to MarketBeat, these analysts have an average target of $270, which is about 20% higher than the current level.

DocuSign stock price analysis

Docusign Stock Price
DocuSign stock price chart

The daily chart shows that the DocuSign stock price popped today after the company released strong quarterly results. By so doing, the shares managed to move above the 25-day and 50-day weighted moving averages (WMA).

A closer look at the chart shows that the stock was forming a head and shoulders pattern whose right shoulder is at $236. This means that the company’s share price is not out of the woods yet. This is because bulls need to move above the right shoulder to invalidate this pattern. 

Therefore, at thos point, the outlook remains neutral, with the key level to watch being $236. Any move above that resistance will open the possibility of it retesting its YTD high at $277.

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