Citi analysts slashed their price target for Docusign (NASDAQ:DOCU) to $86 from $93, while maintaining a Buy rating, ahead of the company’s Q1/25 earnings report, scheduled tomorrow, after the market close.

The analysts indicated that the outlook for the company appears balanced, as industry checks show that partners met Q1 targets and web traffic showed slight improvement. While the near-term guidance seems attainable, there may be challenges in achieving higher growth in the second half of the year due to cautious partner commentary and macroeconomic uncertainties.

Citi’s fiscal 2025 operating margin forecast is about 100 basis points higher than the consensus, indicating continued opportunities for margin improvement, even after recent workforce reductions, as DOCU focuses on product-led growth (PLG) and increased automation.

Despite slightly moderating estimates, the analysts remain at the high end of the guidance, adjusting the price target to $86 based on updated regression analysis. The Buy/High Risk rating is upheld due to the broad market potential, margin improvement opportunities, and the enhanced PLG strategy.

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