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JPMorgan initiated coverage on banking software provider nCino Inc. (NASDAQ:NCNO) with a neutral rating and a $30.00 price target on Wednesday, slightly above the current trading price of $27.08. According to InvestingPro data, analyst targets for the stock range from $26 to $35, with the company showing moderate debt levels and expected profitability this year.
The financial services firm noted that nCino aims to become a "Rule of 40" company by the end of fiscal year 2027, referring to the benchmark where a company’s revenue growth rate plus profit margin equals or exceeds 40%. The company currently demonstrates revenue growth of 13.4% and maintains a gross profit margin of 60%, according to InvestingPro data, which shows the company’s progress toward this goal. InvestingPro subscribers have access to 6 additional key insights about nCino’s financial health and growth prospects.
JPMorgan observed that banks are increasingly prioritizing functionality over configurability in nCino’s offerings, particularly in down-market segments, while the company works to shorten project timelines through more prescriptive products and AI tools to improve profitability. This focus on efficiency is crucial, as InvestingPro analysis indicates the company is not yet profitable over the last twelve months, though analysts expect positive earnings this fiscal year.
The firm highlighted that nCino is shifting focus from professional services revenue growth to improving professional services profit margins, acknowledging how these services impact total gross margins, with the company targeting 71-75% overall gross margins long-term compared to its current 66% in the first quarter of fiscal 2026.
According to JPMorgan, nCino expects research and development to be a primary driver of margin expansion, with subscription margins projected to reach 78-80% longer term through a product mix shift toward margin-accretive offerings including omnichannel US mortgage, new onboarding, Banking Advisor, and AI and analytics solutions.
In other recent news, several analysts have provided updates on nCino Inc., reflecting a generally positive outlook. UBS has increased the price target for nCino to $34, maintaining a Buy rating, following the company’s first-quarter results for fiscal year 2026, which slightly exceeded expectations in both total revenue and non-GAAP operating income. Citizens JMP also raised the price target for nCino to $35, citing the company’s AI strategy and new pricing model as potential growth drivers. Truist Securities increased its price target to $27, highlighting strong international growth and a solid sales pipeline, though it maintained a Hold rating. Keefe, Bruyette & Woods set a price target of $33, attributing this to higher subscription revenue and reduced operating expenses.
Additionally, nCino’s recent strategic moves, such as a 7% workforce reduction, are expected to yield significant cost savings, further bolstering investor confidence. These developments come amid a competitive landscape, with nCino’s functionality improvements noted as a potential advantage. KeyBanc Capital Markets, on the other hand, maintained a neutral stance on nCino following the Digital Banking 2025 conference, due to mixed reactions to its new pricing model. Despite this, the overall sentiment from analysts suggests optimism about nCino’s growth trajectory and market position.
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