DocuSign stock rose on Friday as the e-signature company showed signs of stabilizing after a post-pandemic slowdown. Its longer-term prospects could be boosted by artificial intelligence.
Shares of DocuSign (Ticker: DOCU) are down 2.9% at $56.81 as of 2:27 p.m. Friday after rising as much as 11% in early trade.
The immediate cause was the company’s first-quarter profit increase and guidance upgrade. However, there were also signs of optimism about the AI-powered products.
AI models like ChatGPT might initially look like a threat to DocuSign’s business if they are able to generate and modify contracts. However, the company is confident that customers will turn to DocuSign for specialized contract services.
“If you look at DocuSign, we have extensive experience from several years developing contract-specific models. “It’s not the same as writing a high school essay,” DocuSign CEO Allan Thygesen said in a conference call to analysts Thursday.
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DocuSign has a long history of AI integration before the recent boom in interest in the technology. In 2020, the company acquired Seal Software, an AI analytics company, for $188 million. It also recently announced that it would use Microsoft’s OpenAI technology (MSFT) to provide summaries of agreements.
“Generative AI may open up a new opportunity… by transforming the architecture of the contract workflow with new products and enhancements powered by artificial intelligence,” Wedbush analyst Daniel Ives wrote in a research note on Friday.
Wedbush has a Neutral rating on the stock, but raised its price target to $67 from $60.
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Analysts at RBC Capital Markets wrote in a research note that generative AI could drive more customers to use DocuSign’s “Contract Life Cycle Management” products — software used to manage contracts longer-term.
RBC reiterated a Sector Perform rating and a $59 price target for DocuSign, noting that while the company is grappling with macroeconomic headwinds, it’s too early to assess the potential success of its product innovation.
Corrections and additions:
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Allan Thygesen is the CEO of DocuSign. A previous version of this article said he was DocuSign’s director of investor relations.
Write to Adam Clark at [email protected]