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Investing.com -- Morgan Stanley raised its rating on cloud banking software provider nCino Inc to Overweight, saying lowered expectations and a stronger product portfolio set the stage for faster growth.
The brokerage bumped its price target by $1 to $36.
“Lowered expectations creates an opportunity to own a high-quality vertical software business trading at a discount to private market value with acceleration on the horizon,” the analysts at MS said, adding that a pricing transition, improved solutions, and a compelling AI strategy could drive revenue acceleration.
Morgan Stanley said nCino’s shift to a new pricing model is underappreciated and could add around two percentage points to subscription revenue growth in fiscal 2027.
About 21% of annual contract value has already moved to the new structure, which includes one-time 10% price increases at renewal and ongoing assessments tied to client asset growth.
The brokerage also highlighted progress in the company’s product portfolio. Its consumer lending platform is gaining traction, with 43 net new wins in fiscal 2025, while Banking Advisor, an AI-powered tool, is showing strong interest from major banks.
“Some of the biggest banks in the world are already using the Banking Advisor product,” Morgan Stanley said.
In mortgages, churn has eased and volumes are expected to improve. More than half of nCino’s mortgage business is indexed to volumes, meaning lower rates could offer an additional uplift.
Valuation also played a role in the upgrade. Morgan Stanley pointed to Centerbridge’s $2 billion acquisition of MeridianLink at 5.7 times 2026 revenue, compared with nCino’s 5.4 times.
MeridianLink transaction implies that NCNO is trading at a discount to private market value, according to the analysts.
“We have built more conviction that the company is poised to deliver a more durable runway of beats and raises,” Morgan Stanley added.