William Blair upgrades nCino on attractive valuation and improved visibility

Investing.com -- William Blair upgraded nCino to outperform from market perform, saying the recent sell-off in bank technology stocks has left the cloud banking platform trading at an attractive valuation, while improved visibility under conservative guidance sets up potential upside.

Shares of nCino have fallen about 22% since late August, compared with a 4% gain in the S&P 500.

William Blair said the pullback is overdone and now offers an entry point, with the stock trading at 4.9 times 2026 revenue versus 7 times for vertical SaaS peers and 9 times for "Rule of 40" names.

The Rule of 40 is that the combined value of revenue growth rate and profit margin should exceed 40% for healthy SaaS companies.

The firm noted nCino generated $53 million in free cash flow in fiscal 2025 and is targeting Rule-of-40 status exiting fiscal 2027.

The banktech company reset expectations in April, cutting growth forecasts. Its fiscal 2026 guidance calls for 10% subscription revenue growth, or about 6% on an organic basis, down from 12% in 2025.

But William Blair said the decline looks overstated given one-time revenues in the prior year, with adjusted guidance pointing to 8% organic growth.

The firm expects nCino to deliver high-single-digit subscription growth longer term, aided by international expansion, stronger penetration in credit unions, and cross-selling in mortgages.

Importantly, the outlook does not factor in further recovery in mortgage, which rose 22% in the July quarter. Guidance now calls for 5% full-year mortgage growth, though William Blair sees room for upside as adoption broadens.

The firm said nCino’s shift to a more conservative forecasting approach increases the likelihood of beat-and-raise quarters ahead. Combined with valuation support after the stock’s sharp pullback, it sees an attractive setup for investors.