DocuSign (DOCU) Stock Sees Two Downgrades Despite Q4 Earnings Beat

TLDR

• Citizens reduced its DocuSign price target from $124 to $86, citing worries about revenue growth, while retaining a Market Outperform rating
• Wells Fargo lowered its target from $75 to $60, keeping an Equal Weight rating
• DOCU has fallen 44% over the past six months and is currently trading around $47.54
• Q4 FY2026 EPS came in at $1.01, surpassing the $0.95 estimate; revenue hit $837M, exceeding the $827.9M forecast
• IAM product revenue reached $350M (11% of total) in Q4, with guidance to reach $600M (18%) by the end of FY2027

(SeaPRwire) –   DocuSign has endured a tough six-month stretch, and Wall Street is adjusting its projections accordingly. Two analyst firms this week trimmed their price targets for the stock—one by a substantial margin.

DocuSign, Inc., DOCU

Citizens cut its target from $124 to $86, a 31% drop, though it kept its Market Outperform rating unchanged. The firm cited revenue growth concerns as the key reason for the adjustment.

The stock currently trades around $47.54—well below even the reduced targets—and has declined 44% over the past six months. This is a steep fall for a company that still posts 79.5% gross margins and holds more cash than debt.

Wells Fargo took a more cautious approach, lowering its target from $75 to $60 while maintaining an Equal Weight rating. The firm noted that Q4 results were largely in line with expectations, though “slightly below” the recent beats observed.

Wells Fargo pointed out that increased R&D investment is likely to constrain margin expansion going forward. New disclosures from the company also mean analysts will need to reevaluate their forward-looking models.

Q4 Results Beat Estimates

Despite the bearish target adjustments, DocuSign’s Q4 FY2026 results were actually solid. EPS came in at $1.01, ahead of the $0.95 consensus. Revenue reached $837 million, slightly above the $827.9 million estimate.

This beat did little to ease concerns about the pace of future growth, which is the main driver behind the target cuts.

IAM Product and AI Progress

One area of focus for optimistic investors is the company’s IAM platform, which generated $350 million in Q4, making up 11% of total revenue. DocuSign has guided that this figure will reach $600 million, or 18% of total revenue, by the end of FY2027.

The company is also shifting to consumption-based subscription pricing starting in Q1.

On the AI front, its Iris engine is now trained on over 200 million private, consented agreements via Navigator, up from 150 million in December. DocuSign states it has reduced AI processing costs by up to 50 times compared to running direct prompts on large language models.

The company serves a $50 billion total addressable market, split evenly between e-signature and contract lifecycle management, and has 1.8 million customers across its platform.

Wells Fargo noted that new ARR guidance calls for roughly 50 basis points of acceleration as it heads into FY2027.