DocuSign's (DOCU) Intelligent Agreement Management economics remains unclear, and the AI-powered platform looks more defensive than a source of durable growth, Morgan Stanley analysts said in a Wednesday research note.

The IAM platform is growing fast and increasing in mix, and these positives are supposed to continue into fiscal 2027, the analysts said.

However, the bull case of an IAM driven inflection to double-digit growth is now less credible as the AI-powered platform helped to "improve gross retention instead of clear net expansion benefits," they added.

The company rolled out a new subscription consumption-based pricing model for IAM in Q1, focusing on prepaid capacity and service credits, which could improve monetization, but questions remain around the decision driving meaningful annual recurring revenue growth, the analysts said.

The brokerage said it reiterated its equalweight rating on the stock and cut its price target to $69 per share from $90.

Price: 48.32, Change: +0.77, Percent Change: +1.63