Friday File: Smoke in the Box

EverArc/Perimeter, NewLake, Match and more...

By Travis Johnson, Stock Gumshoe, September 3, 2021


The hardest thing to do is nothing, and I again failed in that task this week. I added a new position to the Real Money Portfolio earlier this week in Match Group (MTCH), added a new position in a new company to the Lock Box at the close yesterday, and I’ll get to all of that in a moment… but we’ll start small, with some of the quarterly update news and other tidbits from a few of our favorite companies… and this week I’m finishing up the Friday File early in the day and publishing midday, since we’ve got a long weekend ahead, so hopefully nothing too dramatic has happened in the moments between me sending this note and you reading it.

DocuSign (DOCU) released a quarter that was pretty much as expected, they beat and raised by a little bit, and that’s generally not enough to get people excited about a stock trading at 35X sales… and yet, despite the lack of real blowout numbers, the stock popped to new highs after earnings. A bunck of analysts upgraded their price targets, but mostly to levels right around $300, about where the stock now trades, and the ones who updated their reports this morning kept a pretty “neutral” rating on the shares. My sense is that this remains a great company, the stickiness of the e-signature is going to be impressive and they have maintained their market lead despite strong competition from folks like Adobe and Microsoft, and they’re beginning to have some traction with their “agreement cloud” contract/agreement management platform… but also that they’re never going to have a single year as good as 2020, and it will take some time for the share price and the valuation to digest that. The stock has actually trailed the S&P 500 over the past year, now that we’ve lapped the wild March-July move from 2020. Here are the two positive analyst notes I saw this morning in Briefing.com:

BofA Securities raises their DOCU tgt to $360 from $250. Analyst Kash Rangan noted, “Commentary suggests early traction with the Agreement Cloud, led my early adoption of CLM and Analyzer, as customers begin to rely on DocuSign for more strategic digital transformation projects involving workflow automation. International also stands out, growing 71% on a 60% comparison.”

Needham’s Scott Berg notes, “Docusign reported another strong quarter in 2QF22 with typical DOCU ...

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