DocuSign (DOCU) Stock Gets Double Downgrade Despite Q4 Earnings Beat

TLDR

• Citizens cut its DocuSign price target to $86 from $124, citing revenue growth concerns, while keeping a Market Outperform rating
• Wells Fargo cut its target to $60 from $75, maintaining an Equal Weight rating
• DOCU is down 44% over the past six months, currently trading around $47.54
• Q4 FY2026 EPS came in at $1.01, beating the $0.95 estimate; revenue of $837M topped the $827.9M forecast
• IAM product revenue hit $350M (11% of total) in Q4, with guidance to $600M (18%) by end of FY2027

DocuSign has had a rough six months, and Wall Street is adjusting its expectations accordingly. Two analyst firms trimmed their price targets on the stock this week — one of them by a wide margin.

DocuSign, Inc., DOCU

Citizens cut its target from $124 to $86, a 31% reduction, though it kept its Market Outperform rating intact. The firm pointed to revenue growth concerns as the driver behind the move.

The stock currently trades around $47.54 — well below even the lowered targets — and is down 44% over the past six months. That’s a steep drop for a company that still posts gross margins of 79.5% and carries more cash than debt.

Wells Fargo took a more measured approach, trimming its target from $75 to $60 while keeping an Equal Weight rating. The firm said Q4 results were broadly in line, though “a touch below” the beats seen recently.

Wells flagged that increased R&D investment is likely to limit margin expansion going forward. New disclosures from the company also mean analysts will need to recalibrate their forward models.

Q4 Results Beat Estimates

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

The beat didn’t do much to calm concerns about the pace of future growth, which is what’s really driving the target cuts.

IAM Product and AI Progress

One area of focus for bulls is the company’s IAM platform, which brought in $350 million in Q4, representing 11% of total revenue. DocuSign has guided that number to $600 million, or 18% of total revenue, by the end of FY2027.

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

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

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

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

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