DocuSign stock surges after Morgan Stanley upgrade

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Shares of DocuSign Inc. are up 5.2% in Monday trading after Morgan Stanley analyst Stan Zlotsky upgraded the stock to overweight from equal weight. “Strong fundamentals coupled with more durable COVID-19 tailwinds make the DocuSign story more compelling than ever,” he wrote in a note to clients. Zlotsky argued that DocuSign is one of the “select few” stocks to actually see benefits from the COVID-19 crisis, which could drive durable tailwinds for the company. He expects “very healthy renewal rates” as customers are unlikely to go back to manual processes after trying the company’s electronic-signature solutions, in his view. Zlotsky said that DocuSign now trades at 24 times estimates for calendar 2021 enterprise value to sales but that on a growth-adjusted basis, the company trades at a 0.62x multiple, slightly cheaper than the software-as-a-service category average of 0.64x. He has a $260 price target on DocuSign’s stock, which has added 21% over the past three months as the S&P 500 has risen 8.6%.
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