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On Wednesday, Raymond (NSE:RYMD) James analyst Alexander Sklar adjusted the price target for nCino Inc. (NASDAQ:NCNO) shares, decreasing it from $42.00 to $32.00 while maintaining an Outperform rating. The revision followed the company’s fiscal year 2026 growth outlook, which fell short of even the lowest estimates on Wall Street, leading to a significant drop in share value of approximately 30% after hours. According to InvestingPro data, the stock is currently trading near its 52-week low of $27.29, with a market capitalization of $3.26 billion. InvestingPro’s Fair Value analysis suggests the stock may be slightly undervalued at current levels.
Sklar’s commentary highlighted the maintained Outperform rating despite the company’s projection of a more modest growth profile than previously anticipated. The analyst pointed out that the current high-single to mid-single digit ACV/revenue growth outlook starts from a lower base of just 8% organic growth exiting fiscal year 2025. However, Sklar remains confident in the company’s accelerating growth thesis over the next few years. InvestingPro data shows the company achieved revenue growth of 13.19% in the last twelve months, with two key ProTips indicating that net income is expected to grow this year and the company maintains strong liquidity with current assets exceeding short-term obligations. Subscribers can access 5 additional ProTips and a comprehensive Pro Research Report for deeper insights.
The analyst also addressed investor skepticism given the current macroeconomic environment, reminding them of the challenges nCino has faced over the past three years, including the post-PPP period, rate shocks, liquidity crises, and European headwinds. Sklar emphasized the potential for continued improvement in churn rates, which at 6% in FY25, should decrease further. Additionally, the cross-selling strategy, with new products such as Commercial Onboarding and Consumer Lending showing better-than-expected traction, was noted as more strategic than ever. The company’s financial health appears stable, with InvestingPro metrics showing a healthy current ratio of 1.95 and moderate debt levels.
Sklar expressed belief in nCino’s ability to achieve an organic Rule of 40 profile during fiscal year 2028, with growth accelerating even without mortgage tailwinds. Despite potential short-term investor hesitancy following the fourth fiscal quarter results, the analyst conveyed a very favorable risk/reward outlook for the stock, with valuation multiples around 4 times the estimated calendar year 2026 revenue and 18 times the EBITDA. Current InvestingPro data shows an EV/EBITDA multiple of 115.63x, reflecting the market’s growth expectations for the company.
In other recent news, Ncino reported its Q4 2025 earnings, revealing a mix of results as the company missed earnings per share (EPS) projections but slightly surpassed revenue expectations. The EPS was reported at $0.12, falling short of the anticipated $0.19, while revenue came in at $141.4 million, just above the forecast of $140.85 million. The company noted a 14% year-over-year increase in total revenue, with subscription revenues rising by 16%. Ncino also announced a strategic shift towards AI banking solutions under the leadership of its new CEO, Sean Desmond. The company provided guidance for fiscal 2026, projecting revenues between $574.5 million to $578.5 million and highlighted plans to invest $10 million in sales and marketing. Analysts from firms such as Barclays (LON:BARC) and Truist Securities have been engaging with the company, indicating continued interest in its strategic direction. Ncino’s leadership changes and focus on AI are expected to drive future growth, as indicated by the company’s commitment to achieving a Rule of 40 milestone by Q4 of the next fiscal year.
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