Tuesday, 24 September 2019 01:21 GMT

Buy DocuSign, Sell Crowdstrike

(MENAFN - Baystreet.ca) DocuSign (NASDAQ:DOCU) soared 22% on Sep. 6 after reporting Q2 results. Its upside revenue guidance for Q3 and for FY 2020 are both sharply higher than consensus estimates. The worst is over for DOCU stock.

DocuSign has ~537K customers and a TAM of $25 billion. In Q2, billings grew 47% Y/Y to $252.4 million. For Q3, revenue may top $241 million, up from the $231.9 million consensus estimates. In FY 2020, revenue will be $947M - $951M. Analysts expected $920.4M.

The improved recurring subscription revenue visibility and higher customer base spend are two reasons to buy the stock.

Crowdstrike (NASDAQ:CRWD) is sharply below its $99 highs of August. The company's Q2/2020 report posted on Sept. 5 is a disappointment.

The security firm lost $0.18 a share even though revenue grew 94% Y/Y to $108.1 million. Even though subscription revenue grew 98% and ARR grew 104% to $423.8 million, this is a very expensive SAAS IPO stock.

The subscription revenue growth dropped from 116% last quarter, too. Plus, last week's post-earnings selling volume could continue into the month, pushing the stock to the $60 level. CRWD closed at $76 last week.

Investors may model a deceleration in revenue growth and set a revenue exit multiple as low as 12 times to arrive at a price target in the $55 range.


Buy DocuSign, Sell Crowdstrike

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