DocuSign Inc. (NASDAQ: DOCU) was upgraded from Hold to Buy, and the $50 price target was lifted to $70. The calendar year price-toevenue multiple was raised from 3.6 to 5.2. Jefferies expects that revenue growth can “normalize” in the low double-digit range and has modeled a top-line compound annual growth rate of 10% for the next four fiscal years, above the Wall Street average of 8%. There is also room for margin expansion. DocuSign stock trades at a discount of around 38% to comparable companies and a 60% to 70% discount to the price Thoma Bravo recently paid for Coups Software.
At a share price of around $55, the implied upside to the $70 Jeffries price target is 27.3%. The stock’s 52-week range is $39.57 to $153.49.
CrowdStrike Holdings Inc. (NASDAQ: CRWD) was downgraded from Buy to Hold, while the $175 price target was lowered to $120. The implied price-to-2023 estimated revenue multiple dropped from 13.7 to 9.2. Jefferies analysts believe that the opportunity to displace legacy vendors remains but that it is not as large as it was. Microsoft is also a threat to the company’s own recurring revenue guidance, which was not that impressive to begin with.
CrowdStrike trades at around $96 a share, implying a potential upside of 25% to the $120 Jefferies price target. The stock’s 52-week range is $94.63 to $242.00.
Palantir Technologies Inc. (NYSE: PLTR) also was downgraded from Buy to Hold, and its $9 price target dropped to $7.50. The implied price-to-2023 estimated revenue multiple decreased from 7.2 to 5.9. While Jefferies believes that Palantir has a wide technology moat and “a data platform that can address complex mission-critical use cases that no other vendor can,” Palantir’s “long-term fundamentals must be balanced with near-term results.” The analysts continue: “Given the recent lack of execution on the government business (new US government deals pushed out indefinitely) and a meaningful deceleration on the commercial front, we think that upside is capped in the absence of a growth inflection.”
At a share price of around $6.00, the implied gain based on Jefferies’ new price target is 25%. The stock’s 52-week range is $5.92 to $18.57.
Dropbox Inc. (NASDAQ: DBX) was downgraded from Buy to Hold, and its $28 price target is now $25. The implied price-to-2023 estimated revenue multiple dropped from 4.2 to 3.8. Dropbox receives 90% of its revenue from small and medium-sized businesses, and current macro conditions call into question further top-line growth and raise the possibility of more churn. International business accounts for 30% of revenue, making Dropbox susceptible to foreign exchange pressure. The company is “less likely to outperform in the future.” Jefferies does not think Dropbox’s future growth path is clear enough to lead it out of the macroeconomic mire.
The stock trades at around $22, implying a gain of 13.6% to Jefferies’ new price target. The stock’s 52-week range is $19.07 to $25.80.
And Varonis Systems Inc. (NASDAQ: VRNS) saw its Buy rating slip to Hold and its $30 price target reduced to $26. The implied price-to-2023 estimated revenue multiple was dropped from 5.8 to 4.9. The company is working through a four- to six-year transition to a software as a service (SaaS) model that Jefferies sees as a volatility risk in the near term. The analysts also think an enterprise value-to-2023 estimated revenue multiple of 4 is “justified for this show me story.”
At a share price of about $23, the implied gain based on the new price target is 13%. Varonis stock’s 52-week range is $15.61 to $51.60.
Originally published at 24/7 Wall St.
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