DocuSign (DOCU) could be one of the biggest comeback stories of 2022.
Sure, over the last few days, DOCU slipped about $100 a share after the company said Q4 revenue would come in between $557 million and $564 million, which is below expectations for $573.8 million. Several firms also lowered their ratings on the stock.
However, it appears a good deal of negativity has been priced into the stock. In fact, the last few times RSI, MACD, and Williams’ %R became this oversold, the DOCU stock blasted higher shortly after. We’re hoping the same thing can happen, as weak hands exit the stock.
Downside has also attracted buyers, including Ark Invest CEO Cathie Wood, whose funds bought 747,000 shares of DOCU on the dip. Even DOCU CEO Daniel Springer just bought $5 million worth of the stock shortly after the fall. Then, he bought another 1,100 shares.
Also, it appears the pile on of analyst downgrades has been priced into the stock, too.
According to TheFly.com:
– JPMorgan downgraded DocuSign to Underweight from Neutral with a $175 price target following results. Tailwinds from pandemic tailwinds “came to a much faster than expected halt” in Q3.
– UBS analysts downgraded DocuSign to Neutral from Buy with a price target of $170.
– Piper Sandler downgraded DocuSign to Neutral from Overweight with a price target of $200, down from $330.
– Needham downgraded DocuSign to Hold from Buy. “The company’s Q3 billings growth of 28% was below guidance and also below 55% and 46% rates of the last two quarters as end-market demand is slowing much faster than expected just 90 days ago.”
– Wedbush downgraded DOCU to Neutral from Outperform with a price target of $200.
At a current price of about $150, DOCU became one of the most hated stocks on the market. However, we’d argue most of the negativity has been priced in. With patience, we’d like to see DOCU refill its bearish gap around $240.
Going against the grain could pay off very well for DOCU contrarians.