Electronic signature service provider Docusign (DOCU.US) fell nearly 7% in early Friday trading despite reporting what some analysts called "solid" third-quarter results and guidance. Multiple Wall Street firms lowered their price targets, weighing on market sentiment.

Wedbush analysts noted in a report that Docusign delivered "a clean beat across the board" this quarter, with both revenue and earnings surpassing expectations, driven by strong demand for identity access management (IAM) and e-signature solutions. However, they emphasized that the company's conservative outlook would overshadow these positive results. "While the quarter was solid, we believe the raised guidance remains conservative," Wedbush stated, maintaining a "Neutral" rating but cutting the target price from $85 to $75.

Piper Sandler also reduced Docusign's target price from $90 to $75, reflecting market caution about the company's prospects.

For the quarter ended October 31, Docusign reported adjusted earnings per share of $1.01, beating the $0.92 analyst consensus. Revenue grew 8.4% year-over-year to $818 million, exceeding the $807 million estimate. Subscription revenue accounted for $801 million, while professional services and other income totaled $17.4 million.

Looking ahead to Q4, the company projected revenue between $825 million and $829 million, with the midpoint slightly below the $827.4 million consensus. Subscription revenue is expected to range from $808 million to $812 million, while billings are forecast at $992 million to $1 billion. Adjusted gross margin is anticipated to be 80.8% to 81.1%.

Despite near-term conservative guidance, Docusign raised its full-year outlook. The company now expects annual revenue of $3.208 billion to $3.212 billion, up from the prior $3.19 billion to $3.2 billion range. Subscription revenue guidance was also lifted to $3.14 billion-$3.144 billion, better than the previous $3.12 billion-$3.13 billion target.

While Docusign delivered strong Q3 performance, Wall Street remains divided between growth momentum and management's cautious outlook. The price target cuts emerged as the primary driver behind the stock decline. Investors will continue monitoring the company's stability in subscription growth, billings expansion, and margin maintenance.