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Today's top analyst calls - Dec 3: DOCU MRVL FSLY PTON

SELL DOCUSIGN AFTER Q3 REPORT, JPMORGAN SAYS: JPMorgan analyst Sterling Auty downgraded DocuSign ($DOCU) to Underweight from Neutral with a $175 price target following last night's results. Tailwinds from pandemic tailwinds "came to a much faster than expected halt" in Q3, Auty tells investors in a research note. DocuSign's sales now need to pivot from a focus on demand fulfillment to demand generation, which will lead to revenue growth seeing a "noticeable deceleration" into the first half of next fiscal year, says the analyst. Auty thinks the shares could underperform software peers during this timeframe even though DocuSign's long-term market opportunity "remains robust."

Meanwhile, UBS analyst Karl Keirstead downgraded DocuSign to Neutral from Buy with a price target of $170, down from $350, following last night's results. The company reported a "thesis-changing print" with billings growth of just 28% and guidance for just 23% billings growth in Q4, Keirstead tells investors in a research note. The analyst lowered estimates for fiscal 2023 saying his prior thesis that DocuSign could maintain 30%-plus billings and revenue growth for years even as employees returned to office "was clearly wrong."

Piper Sandler analyst Rob Owens downgraded DocuSign to Neutral from Overweight with a price target of $200, down from $330. The company last night posted a billings miss and only a modest revenue beat as it failed to maintain momentum as demand normalization happened faster than expected post-pandemic, Owens tells investors in a research note. The analyst says DocuSign's "weak" guidance adds to the uncertainty. He has a a lack of confidence in the timeline of DocuSign's turnaround, "setting 2022 up for a murky year."

Needham analyst Scott Berg downgraded DocuSign to Hold from Buy. The company's Q3 billings growth of 28% was below guidance and also below 55% and 46% rates of the last two quarters as end-market demand is slowing much faster than expected just 90 days ago, the analyst tells investors in a research note. While DocuSign's changes to its sales organization to revert its sales model to one that is more proactively generating demand is a positive development, its short or intermediate term subs revenue growth of high 20% calls for a valuation closer to 11-times revenue rather than the 13-times multiple at which the stock is trading after hours, Berg adds.

Wedbush analyst Daniel Ives downgraded DocuSign to Neutral from Outperform with a price target of $200, down from $340 following what he called a "debacle quarter" as the company hit a major growth hurdle with customer buying behavior that "appeared to change overnight." The company missed on the key billings metric and it seems management was "caught blindsided by the quickly changing sales environment, which Ives calls "a worrying trend." DocuSign has been one of his favorite growth plays over the past few years, but he believes the company is seeing a much more difficult selling environment as it expands into broader strategic deals and Ives worries about staying bullish if "the clock hitting midnight on the [DocuSign] hypergrowth story"

GOLDMAN COMES OFF SIDELINES, UPGRADES MARVELL TO BUY AFTER EARNINGS: Goldman Sachs analyst Toshiya Hari upgraded Marvell ($MRVL) to Buy from Neutral with a price target of $95, up from $63. While acknowledging staying on the sidelines has been the wrong call with the stock up 49% year-to-date, Hari recognizes having underestimated the inflection in the company's fundamentals. The analyst believes the company is still in the early stage of its multi-year growth journey, given company-specific design wins that span the Data Center, 5G infrastructure, and Automotive end-markets. Hari expects revenue growth in excess of its long-term target, coupled with steady gross margins, to drive an EPS compound annual growth rate of 47% from FY22-25.

Cowen analyst Karl Ackerman also upgraded Marvell to Outperform from Market Perform with a price target of $100, up from $66. It's hard to argue that last night's results were "anything but a watershed quarter" with better guidance and an expanding design pipeline that anchors a new fiscal 2023 outlook, Ackerman tells investors in a research note. The analyst says Marvell's "fortified portfolio sits in the sweet spot of several thematic secular growth drivers" that will allow it to materially outgrow the broader semi space.

FASTLY SEEN OUTPERFORMING AMID RISING SHORT INTEREST: Raymond James analyst Frank Louthan upgraded Fastly ($FSLY) to Outperform from Market Perform with a $42 price target. The shares are about two points off the 52-week low and 20% below the 50-day moving average, with a recent uptick in short interest, Louthan tells investors in a research note. However, Raymond James' propriety tracking tool suggests another sequential uptick in traffic and that Fastly should beat the high end of its revenue outlook, Louthan tells investors in a research note. This is a "recipe for near-term share price appreciation," says the analyst.

DEUTSCHE SAYS BUY PELOTON: Deutsche Bank analyst Chris Woronka initiated coverage of Peloton Interactive ($PTON) with a Buy rating and $76 price target. While there there are scenarios in which Peloton shares go lower from here, there are more scenarios that result in greater upside based on a "fundamental and unemotional analysis" of the company's earnings power in a "normalized," fully-reopened economic environment, Woronka tells investors in a research note. The analyst thinks the hybrid work model extends to fitness and that Peloton "has plenty of momentum to regain operationally." If the stock "can regain its footing for fundamental reasons, it has quite a bit of room to run," contends Woronka.


Disclosure: I may trade in the ticker symbols mentioned, both long or short. My articles represent my personal opinion and analysis and should not be taken as investment advice. Readers should do their own research before making decisions to buy or sell securities. Trading and investing include risks, including loss of principal.

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