On Thursday, Keefe, Bruyette & Woods made adjustments to its outlook on shares of nCino Inc. (NASDAQ: NCNO), reducing the price target to $44.00 from the previous $49.00. Despite this change, the firm maintained its Outperform rating on the company's stock.
The revision followed nCino's third-quarter earnings, which surpassed expectations, although the forecast for the fourth quarter did not meet analysts' hopes. The company's guidance suggested a downward adjustment of approximately $4 million, or 3.5%, in subscription revenue, excluding FullCircl contributions.
InvestingPro analysis shows the company maintains strong financial health with a current ratio of 1.95 and operates with moderate debt levels, suggesting resilience despite near-term challenges.
The tempered fourth-quarter outlook was attributed by nCino's management to challenges within the U.S. mortgage sector, including M&A-driven churn and weaker origination volumes.
Nevertheless, the company indicated that bookings in the U.S., excluding the mortgage segment, continued to exceed targets. While international operations are still under pressure due to macroeconomic factors, there has been some noted momentum.
Following the earnings report, the market's attention has turned to the softer projected organic subscription revenue growth for the fourth quarter. Analysts estimate this growth to be in the low double-digits, which is below the company's own target of 15% for the next year. This recalibration of growth expectations has resulted in a 15% decline in nCino's stock value after trading hours.
In light of these developments, Keefe, Bruyette & Woods has revised its revenue growth forecasts for the fiscal years 2026 and 2027. However, the firm anticipates a modest increase in earnings per share (EPS) and operating income estimates. Despite the current challenges and the need for nCino to demonstrate its capacity for growth acceleration, the analyst firm remains positive about the stock's potential.
In other recent news, nCino, a cloud banking software provider, has experienced a series of adjustments in its stock price targets by various analyst firms due to its recent financial performance and market realities.
Baird lowered its price target from $43 to $42 while maintaining a neutral stance, citing the company's recent revenue increase of 14% and improved EBIT margins. However, the firm also noted challenges in the mortgage sector and a subdued recovery outlook for the fourth quarter.
In contrast, Stephens raised its price target from $35 to $38, acknowledging nCino's strong performance in areas other than the mortgage sector. The firm noted the company's successful expansion in international markets and maintained its long-term positive outlook despite current uncertainties.
Needham also remained positive, increasing its price target from $40 to $45 and maintaining a buy rating. The firm attributed nCino's strong third-quarter fiscal year 2025 performance to robust subscription revenue growth and effective cost management.
Goldman Sachs lowered its price target for nCino, citing a cautious stance due to slower core business growth and a reversal in mortgage rates. Despite this, the firm remains optimistic about nCino's prospects for fiscal year 2026, particularly if the regulatory environment becomes less stringent or if interest rates create a more favorable environment for mortgage origination.
Finally, Piper Sandler downgraded nCino from Overweight to Neutral, setting a price target of $38. The firm cited increased customer turnover in nCino's mortgage segment and lowered its 2025 revenue estimate for the company by about $20 million. Despite these adjustments, all analyst firms emphasized nCino's potential for long-term growth.
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