Analyst: DocuSign Stock Faces Too Many Headwinds

DOCU was up 18% this month before today's downgrade

Deputy Editor
Jul 21, 2022 at 9:37 AM
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According to Piper Sandler, a number of headwinds could prove risky for DocuSign Inc (NASDAQ:DOCU). The brokerage firm downgraded DOCU to "underweight" from "neutral" and lowered its price target by $11 to $54. The analyst in coverage cited the company's CEO transition, ongoing execution challenges, high employee turnover, and a crumbling macro environment as key factors that could dent the e-signature product provider's shares. In response, DocuSign stock was last seen 3.2% lower to trade at $65.50.

Heading into today, DOCU was up 18% in July alone. However, the shares' 50-day moving average has weighed on the equity for much of the year, and thwarted a rally attempt yesterday. Year-over-year, DOCU is down roughly 80%.

Options traders have been betting rather bullishly lately. The equity's Schaeffer's put/call open interest ratio (SOIR) of 0.76 stands higher than just 11% of annual readings, indicating short-term traders are operating with a strong call-bias at the moment.

Options look like the ideal avenue to pursue for those looking to speculate on DOCU. This is per the equity's Schaeffer's Volatility Index (SVI) of 66%, which stands in the relatively low 25th percentile of readings from the past year. What's more, the security's Schaeffer's Volatility Scorecard (SVS) sits at a slightly elevated 79 out of 100, meaning the shares have exceeded option traders' volatility expectations during the past year.


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