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On Tuesday, Raymond (NSE:RYMD) James analyst Alexander Sklar maintained the price target for nCino Inc. (NASDAQ:NCNO) at $42.00, while retaining an Outperform rating on the company’s stock. According to InvestingPro data, the stock currently trades at $28.98, with analyst targets ranging from $38 to $45, suggesting significant upside potential. Sklar provided insights ahead of nCino’s fourth-quarter fiscal year 2025 results, scheduled for April 1, expressing confidence that the company is on track to establish a base for organic growth in the first half of fiscal year 2026 and to achieve an accelerated growth profile in the following years. The company has demonstrated solid fundamentals with a healthy gross margin of 60.25% and revenue growth of 13.19% over the last twelve months.
Despite the potential slight dilution from recent mergers and acquisitions, Sklar anticipates that nCino will maintain high incremental margins and believes that the company could still attain an organic Rule of 40 profile by fiscal year 2028. InvestingPro analysis reveals the company operates with a moderate level of debt and maintains strong liquidity with a current ratio of 1.95, suggesting financial stability. InvestingPro subscribers have access to over 30 additional financial metrics and insights about nCino’s performance. The analyst noted that while nCino may adopt a more conservative stance in its initial fiscal year 2026 guidance, especially compared to the Street consensus of a 15% increase in subscription growth and a 20% EBIT margin, investor discussions suggest that this cautious outlook is largely anticipated.
Sklar pointed out several factors contributing to a lower initial outlook, including the stagnant mortgage market, which accounts for approximately 17% of nCino’s revenue, increasing macroeconomic uncertainty, and a persistent environment of higher interest rates. These factors are expected to impact the company’s performance, along with the recent change in CEO, which has put pressure on the stock.
However, Sklar remains optimistic about nCino’s prospects, highlighting the potential for multiple expansion as the company establishes a growth floor and the possibility of outperforming expectations if the mortgage market rebounds. With the stock trading near its 52-week low of $27.29, InvestingPro analysis suggests the company is currently undervalued, presenting a potential opportunity for investors. Get the complete picture with InvestingPro’s comprehensive research report, available along with real-time alerts and advanced financial metrics. The analyst’s commentary underscores a belief in nCino’s resilience and future performance, encouraging investors to maintain their Outperform stance on the stock.
In other recent news, nCino, Inc. 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 data connectivity and operational efficiency for financial institutions, providing an advanced Integration Platform as a Service (iPaaS) solution. JMP Securities maintained its Market Outperform rating on nCino, with a price target of $43.00, following the acquisition. The firm highlighted the potential for increased revenue through product and pricing changes, as well as significant opportunities for expansion among nCino’s existing customer base.
The appointment of Sean Desmond as President and CEO was another notable development, with Desmond succeeding Pierre Naudé, who will remain as Executive Chairman. Analysts have shown cautious optimism, noting the abruptness of the leadership change. nCino reaffirmed its guidance for the fourth quarter and fiscal year 2025, targeting 15% subscription revenue growth in fiscal year 2026. Additionally, nCino welcomed Justin Nyweide from HMI Capital to its Board of Directors, marking a strategic partnership with a significant shareholder.
JMP Securities adjusted its earnings forecasts for nCino, citing conservative initial guidance from the new CEO and subdued mortgage volumes as influencing factors. Despite these adjustments, the firm remains positive on nCino’s stock, reflecting confidence in the company’s growth trajectory. Investors will be closely watching these developments as nCino continues to navigate the evolving financial services landscape.
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