DocuSign stock forms golden cross as Morgan Stanley boosts target

DocuSign stock continued its strong bull run as the company’s investments in artificial intelligence (AI) starting to pay off. DOCU jumped to $67.05, up by 62% from its lowest level this year. This rally may continue in the foreseeable future as analysts from companies like Morgan Stanley and Evercore boost their outlook.

DocuSign stock is doing well amid revenue and profit growth

DOCU has been in a strong rally in the past few months as it has positioned itself as a major player in the artificial intelligence (AI) industry. In a statement, the company said that its revenue jumped by 9% in the second quarter to $875 million.

IAM is a key product made up of AI agents that analyzes agreement terms and generates contract language. It also has pre-built agents for roles like agreement intake and vendor renewal, and an AI agent studio where customers can build, govern, and deploy custom agents. In a statement, the CEO said:

“Our AI agents are now securely executing contract workflows end-to-end, and the IAM platform also ingested a record volume of agreements.”

Most notably, its Intelligent Agreement Management (IAM) represents 15.1% of its annual recurring revenue (ARR) as of July 31. This is a big increase from 12.6% in April this year. 

The company continued growing its gross margins to 79.7% from the previous 79.3%, with its free cash flow rising to over $295 million. Also, the company boosted its guidance, with Q3 revenue expected to move between $886 million and $890 million. Its gross margin will come in between 81.5% and 81.9%.

The management has also used the cheap valuation to buy back the shares. It spent $306 million buying back its shares, higher than the $201 million it spent last year. It has reduced the number of outstanding shares to 193 million from 205 million in 2024.

Analysts believe that the DocuSign stock has more upside, with Morgan Stanley hiking the target from $69 to $75. Evercore ISI, on the other hand, hiked the target to $65, while Needham reiterated its bullish view. BTIG hiked the target from $60 to $75, while Citizens hiked to $86.

DOCU stock technical analysis

DocuSign stock chart | Source: TradingView

The daily chart shows that the DOCU stock formed a double-bottom pattern at $41.45, its lowest level on February 23 and June 18. It has now moved above the neckline at $57.22, its highest point on June 1. This pattern normally points to a bullish reversal. 

The stock has formed a golden cross pattern, which happens when the 50-day and 200-day moving averages cross each other. This pattern normally leads to more gains over time.

The stock has moved above the Supertrend indicator, which is a bullish sign. Therefore, the stock will likely continue rising as bulls target the key resistance level of $86.6, its highest point on September 18.