Wait on DocuSign.

Its time to talk about another stay at home stock so here is the breakdown on $DOCU, otherwise known as DocuSign.


Current Price: $190.66

52/Wk High: $199.49

52/Wk Low: $43.13


Read below for the breakdown.


DocuSign is an up and coming technology company in which automates the typical paper-based processes through a DTM platform.


Given that COVID-19 has forced workplaces to be separated, Docusign is being given an excellent opportunity to capitalize. For example, if someone needs a document signed, they can use DocuSign, send the document to the recipient, and get it back all digitally.


COVID-19 can clearly be seen as an accelerant to DocuSign and the stock has represented that. Just in the past month, the stock has soared a massive 36.8%.


I believe if COVID-19 cases continue to rise that $DOCU can too but the company must first prove that it can capitalize on that growth through earnings.


Given the catalyst and changing social aspects, I do not see customers that have picked up DocuSign through the pandemic giving up on it even after the crisis. It simplified many processes, therefore streamlining business.


$DOCU delivered on earnings as well in Q1. The company reported a beat for Q1 with a $0.12 EPS versus the $0.10 EPS consensus. Revenue also grew to a reported $297 million.


Finally, as of April 30, the company maintained sizable cash on hand position of $758 million, so in the case of negative headwinds, DocuSign is prepared.


On the other hand, we must be cautious. Although the pandemic is growing, we most likely will not go into another lockdown and the window to capitalize on the opportunity DocuSign was given may be closing.


Furthermore, analysts are not bullish on the stock. Currently, the average price target is $169.50/share representing a disappointing -11.10% downside. Secondly, the high price target is $210.00/share and low is $140.00/share so analysts are widely in disagreement.


Although analysts are bearish at the moment the big money is quite bullish. Currently, 86.80% of common stock is owned by institutions and insiders. Top holders include Black Rock, Capital Research Global Investments, and Capital World Investors.


Overall I very much like the stock but the $DOCU is very much overbought. On the six month chart, the RSI reads 77.39 representing the stock being in overbought territory. On the other hand, the upward trend is remarkable.


In short, I am a buyer on a pullback but until then am holding out. While it's most likely a great long term bet, short term the stock is overextended and I am waiting for the opportunity to present itself.


EAT - SLEEP - PROFIT


Disclaimer: This is not financial advice, simply opinion based on independent research.