In the wake of the onset of the coronavirus from China, some unexpected opportunities have arisen in the markets. Work-at-home stocks have gained traction lately, including those in the e-signature niche. Therefore, an intriguing asset for investors in these troublesome times is DocuSign (NASDAQ:DOCU) stock.
You might not have considered an e-signature company as a way to capitalize on the work-from-home trend. But social distancing might be here to stay for a while. In some areas, the stay-at-home mandate could last for months. This scenario sets DOCU stock for potential outperformance, even if the broader market corrects.
The E-signature Leader
Because of coronavirus concerns, business travel isn’t always a viable alternative. No one can predict how much longer the virus will prevent people from traveling. For the time being, teleconferencing and other niches have come front and center.
Among those niches is electronic signatures. Back in April 2018, when DocuSign went public, electronic document signature providers weren’t exactly a hot topic. This was basically a cottage industry at the time. People weren’t buzzing about DOCU stock on financial message boards and chat rooms.
That’s changing today due to the tremendous social and business impact of the coronavirus. The San Francisco based company is now thrust into the spotlight. It can fill a pressing demand as more companies avoid business travel and insist that contracts and other documents be signed electronically.
Since this is what DocuSign specializes in facilitating, the company is a better fit in this specific niche than Adobe (NASDAQ:ADBE). If you invest in Adobe stock, you’re participating in a more diversified company. If you want a pure and targeted play in e-signatures, stick with DOCU stock.
Analysts Sign Off on DocuSign
A number of prominent experts have given their “signature of approval” to Docusign. One such expert is William Blair analyst Bhavan Suri. He seems to suggest that Docusign could prosper even in the face of a broader business-activity slowdown:
“While the number of business agreements being signed globally may decline, those that are continuing to work are enabled by DocuSign to close agreements without meeting face to face … We expect that DocuSign will be relatively resilient in this environment given digital nature of the products DocuSign provides and the remote implementation options.”
Again, it’s all about social distancing. Face-to-face business interactions are increasingly being frowned upon, and DocuSign already had robust technology in place to meet the newfound demand for digital-signature facilitation.
Morgan Stanley analyst Stan Zlotsky is similarly bullish on the company, stating, “We see DocuSign well positioned within the defensive category of digital transformation spend.”
RBC Capital analyst Alex Zukin, meanwhile, praised DocuSign’s February 2020 acquisition of Seal Software. That acquisition will enhance DocuSign’s ability to leverage the power of artificial intelligence in the domain of contract analytics.
In Zukin’s estimation, “The opportunity to reduce time spent on manual workflows through the addition of Seal to the portfolio can help bolster the value proposition and drive ROI (return on investment) for customers.”
Along with the nods from the financial experts, we can appreciate DocuSign’s strong fourth-quarter earnings results. Specifically, the company’s adjusted earnings for the quarter were up 12 cents per share. That’s a 100% increase compared to the same quarter a year earlier.
Moreover, DocuSign posted quarterly revenue of $274.9 million. This represents an impressive increase of 38% in relation to the same quarter from the prior year. Clearly, the experts are justified in their bullish stance on this exciting company.
The Final Word on DOCU Stock
The e-document market is likely to flourish as the coronavirus has forced businesses to change how they conduct contract signings and other digital-paperwork transactions. DocuSign’s earnings have been strong, and the company is loved by analysts. Therefore, I’m more than happy to add my virtual signature to the growing list of DOCU stock bulls.
Louis Navellier had an unconventional start, as a grad student who accidentally built a market-beating stock system — with returns rivaling even Warren Buffett. In his latest feat, Louis discovered the “Master Key” to profiting from the biggest tech revolution of this (or any) generation. Louis Navellier may hold some of the aforementioned securities in one or more of his newsletters.