Normally, hearing talk of buyouts tends to send a stock upward. However, that wasn’t the case for electronic signature solutions provider DocuSign (NASDAQ:DOCU), as word of several banks getting together to build financing for a buyout was met with a modest decline in DocuSign’s share price.
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Early reports note that the financing is looking reasonably healthy, with a price between $8 billion and $13 billion being thrown around. The deal also has some hefty names potentially involved, as both JPMorgan Chase and Bank of America are looking to handle the financing, and both Deutsche Bank and Jefferies are considering joining in as well.
Moreover, there’s something of a bidding war shaping up, as both Hellman & Friedman and Bain Capital are looking to pick up DocuSign. Despite this, however, it looks like both are looking to get a bargain; with the dollar amounts between $8 and $13 billion, that’s still underbidding, as DocuSign’s market cap is holding around $12.4 billion.
A Declining Property
The problem in a nutshell for DocuSign is that despite the fact that it should be a good idea—having a way to legally sign and return documents created online is a terrific move, especially given how much business takes place online these days—it’s not delivering the way you’d think. Its growth rate has been on the decline since 2021, mostly because the boost it got from the pandemic—when even more business took place online by federal mandate—boiled off.
In fact, DocuSign has lost around 73% of its value over the last three years, which suggests that anyone making a buyout offer might be welcomed avidly, even if they want a discount.
What Is the Target Price for DocuSign Stock?
Turning to Wall Street, analysts have a Hold consensus rating on DOCU stock based on four Buys, 11 Holds, and three Sells assigned in the past three months, as indicated by the graphic below. After an 11.16% loss in its share price over the past year, the average DOCU price target of $60 per share implies 3.34% upside potential.
