Chip stocks fall with Nvidia after data center rev disappointment
On Friday, Keefe, Bruyette & Woods adjusted its outlook on nCino Inc. (NASDAQ:NCNO) by reducing the price target to $40 from the previous $44, while continuing to endorse the stock with an Outperform rating.
The adjustment comes after nCino’s fourth-quarter guidance suggested a slower pace in organic subscription revenue growth, which now projects to be around 9-11%. This marks a deviation from the company’s initial 15% growth target for fiscal year 2026. While the revised forecast has sparked discussions among investors, InvestingPro data shows the company maintains strong fundamentals with a healthy current ratio of 1.95 and revenue growth of 13.19% over the last twelve months. The revised forecast has sparked discussions among investors, who are eagerly awaiting further guidance for FY2026 to gauge nCino’s potential to reaccelerate its growth trajectory.
Analysts at Keefe, Bruyette & Woods have highlighted that the current expectations for FY2026’s organic subscription growth from the buy-side are aligned with the company’s guidance, anticipating no significant acceleration but also factoring in roughly a 4% boost from potential inorganic mergers and acquisitions. The firm’s analysts view this as an opportunity, noting the stock’s significant 30% decline following the third-quarter earnings report, a contrast to the 13% average drop among its peers.
The recent performance has set a lower bar for nCino, which Keefe, Bruyette & Woods believes could lead to an attractive risk-reward situation. The firm has adjusted its estimates and price target accordingly, reflecting the updated growth expectations and market response. Despite the reduction in the price target, the Outperform rating indicates that the firm remains optimistic about nCino’s prospects moving forward.
In other recent news, nCino Inc. has announced its acquisition of Sandbox Banking for $52.5 million in cash, with an additional potential earn-out of $10 million. This strategic move aims to enhance nCino’s data integration capabilities, offering financial institutions improved operational efficiency through an advanced Integration Platform as a Service (iPaaS). The acquisition is expected to simplify digital transformation projects for banks and credit unions. Additionally, nCino has appointed Justin Nyweide, a partner at HMI Capital, to its Board of Directors. This appointment is part of a Cooperation Agreement with HMI Capital, a significant shareholder in nCino.
In related developments, JMP Securities has maintained a Market Outperform rating for nCino, with a price target of $43.00, reflecting confidence in the company’s growth potential. Meanwhile, Raymond (NSE:RYMD) James adjusted its price target to $42.00 but continues to rate the stock as Outperform, citing potential for organic growth and resilience despite challenges in the mortgage market. Both firms have expressed optimism about nCino’s future performance, particularly in light of its recent strategic acquisition and board appointment. These developments come as nCino prepares to release its fiscal fourth-quarter 2025 results, which investors are keenly anticipating.
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