A Closer Look at DocuSign (DOCU) Valuation as AI-Fueled Competition Renews Investor Focus

The recent buzz from OpenAI’s launch of a contract analysis tool brought fresh scrutiny to DocuSign (DOCU) and its place in the agreement software arena. However, DocuSign’s approach goes far beyond just extracting contract terms.

See our latest analysis for DocuSign.

After a dramatic 12% drop in share price earlier this year following OpenAI’s contract tool news, DocuSign has shown resilient traction with new AI integrations and the Socure identity partnership. This signals a growing strategic focus. While the stock’s share price remains under pressure this year, its one-year total shareholder return of 3.6% points to longer-term momentum building beneath the surface and suggests investors are looking past near-term hurdles in favor of future growth.

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With DocuSign trading well below analysts' price targets and recent momentum from AI integrations, the key question is whether the market is underestimating its long-term growth or if future gains are already reflected for investors.

Most Popular Narrative: 23.3% Undervalued

With DocuSign shares closing at $71.49 and the most popular narrative placing fair value at $93.16, there is a significant gap between investor sentiment and the narrative’s optimistic growth expectations. This sets the stage for a closer look at why the narrative sees so much upside today.

Rollout and ramp-up of the IAM platform, with AI-native features and deep enterprise system integrations, is unlocking significant upsell opportunities as customers migrate from core eSignature to broader agreement management, driving improved ARPU and supporting double-digit future topline growth.

Read the complete narrative.

Wondering what bold growth assumptions are fueling this valuation? The outlook hinges on digital workflow upgrades, breakthrough AI adoption, and a projected leap in future profitability. Get the details behind these aggressive forecasts to see how rising revenue and margin ambitions could change the game for DocuSign.

Result: Fair Value of $93.16 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, slowing revenue growth and intensifying competition in digital agreements could limit DocuSign's upside if key expansion efforts do not materialize as expected.

Find out about the key risks to this DocuSign narrative.

Another View: Market Multiples Suggest a Premium

While the fair value estimate points to DocuSign being undervalued, looking through the lens of price-to-earnings tells a different story. DocuSign trades at 51.2 times earnings, well above both the US Software industry’s 33.3 and the peer group’s 47.4, and notably higher than the fair ratio of 34. For investors, this signals the market is pricing in high growth expectations, adding risk if those expectations do not materialize.

See what the numbers say about this price — find out in our valuation breakdown.

Build Your Own DocuSign Narrative

If you have a different perspective or want to dive into the numbers yourself, it's quick and easy to craft your own insights in just a few minutes. Do it your way.

A great starting point for your DocuSign research is our analysis highlighting 3 key rewards and 2 important warning signs that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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