UBS lifts nCino stock price target to $34, maintains buy rating

On Friday, UBS analyst Nik Cremo updated the financial outlook for nCino Inc. (NASDAQ:NCNO), which currently trades at $26.15 with a market capitalization of $3 billion, raising the price target to $34 from $31 while reaffirming a Buy rating on the shares. According to InvestingPro data, analysts’ price targets for nCino range from $26 to $33, reflecting mixed sentiment about the company’s prospects. The adjustment follows nCino’s reported first-quarter results for fiscal year 2026, which showed total revenue and non-GAAP operating income slightly exceeding the upper bounds of the company’s guidance by approximately 2% and 1%, respectively. These figures aligned with preliminary results shared during nCino’s Investor Day. InvestingPro data shows the company maintains a solid gross profit margin of 60% and has achieved revenue growth of 13.4% over the last twelve months.

The company’s organic subscription revenue growth, which stood at around 9%, has prompted management to revise its fiscal year 2026 subscription revenue growth forecast to approximately 8-9%, up from the previous 7-8%. Additionally, nCino has adjusted its subscription revenue guidance excluding mortgage, increasing it by roughly $4 million. This includes about $2 million of overperformance in this area during the first quarter.

nCino’s strategic moves include a workforce reduction of 7% and a decrease in office space announced on May 27, 2025. These measures are expected to yield approximately $18 million in additional expense savings, totaling around $24 million when combined with an initial $6 million in cost reductions. However, management plans to apply only about $5 million of these additional savings to the fiscal year 2026 budget to preserve investment flexibility.

The company’s bookings of new annual contract value (ACV) are also showing positive trends. Management has reiterated its expectation for organic net ACV bookings to grow by approximately 19% at the midpoint for fiscal year 2026. These bookings are anticipated to support a boost in subscription revenue growth for the following fiscal year.

In summary, the steps nCino is taking, including both its improved subscription revenue performance and its cost-saving initiatives, have increased UBS’s confidence in the company’s potential to near the Rule of 40 by the end of fiscal year 2027. The Rule of 40 is a benchmark for SaaS companies, suggesting that their combined growth rate and profit margin should exceed 40%. Based on InvestingPro analysis, nCino appears undervalued at current levels, with additional ProTips and comprehensive valuation metrics available to subscribers. The platform’s detailed Pro Research Report offers deeper insights into nCino’s financial health, which currently rates as "FAIR" with a score of 2.36 out of 5.

In other recent news, nCino Inc. has reported first-quarter earnings that surpassed expectations, prompting several financial firms to adjust their price targets for the company. Truist Securities increased its price target from $21 to $27, citing strong subscription revenue and a solid sales pipeline. Keefe, Bruyette & Woods raised their target to $33, highlighting nCino’s higher subscription revenue and reduced operating expenses. BofA Securities adjusted its price target to $30, noting the company’s improved execution credibility and alignment with market expectations.

Morgan Stanley (NYSE:MS) also lifted its price target to $29, reflecting cautious optimism about nCino’s conservative forecasting and cost management efforts. Goldman Sachs increased its price target to $27, acknowledging nCino’s strong first-quarter performance, particularly in commercial and mortgage sectors. Despite these positive developments, some firms, like BofA Securities and Goldman Sachs, maintain a neutral stance on nCino, citing potential challenges in the latter half of the fiscal year.

The company’s recent cost-cutting measures, including a 7% workforce reduction, are expected to provide more investment flexibility. Analysts from various firms have adjusted their revenue and profit outlooks for nCino, with some expressing optimism about future growth. These developments highlight nCino’s strategic efforts to navigate a competitive tech sector and the potential for continued momentum in the coming quarters.

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