On Tuesday, nCino Inc. (NASDAQ: NCNO) stock received an upgrade from Raymond James from Market Perform to Outperform, with a new price target of $38.00.
The upward revision follows a recent decline in the company's share price after the second-quarter fiscal year 2025 results, which the firm attributes to transient concerns rather than a fundamental shift in the company's prospects.
The firm believes that nCino is progressing toward a phase of organic growth acceleration, anticipating high incremental margins above 40% and strong competitive positioning. These factors are expected to contribute to a reevaluation of the company's market multiples upon successful execution of its strategies.
Despite some reservations regarding the consensus growth estimates for the outer year, which did not decrease as much as anticipated following first-half results, the firm anticipates these concerns will resolve within the next couple of quarters.
The analyst from Raymond James highlighted several potential catalysts that could drive nCino's performance in the upcoming 6 to 12 months. These include a resurgence in bookings from larger enterprise and Tier 1 clients, a stabilization of the mortgage business, the exit of pre-IPO shareholders, potential for incremental margin improvement, and the company's progress toward its goal of over 50% year-over-year net bookings growth.
nCino's stock is considered increasingly attractive, trading at approximately 6 times the firm's fiscal year 2026 estimated revenue and 28 times the estimated EBITDA for calendar year 2025. With an EBITDA compound annual growth rate (CAGR) projected at over 30% from fiscal year 2024 to 2027, the firm sees a favorable risk/reward scenario for investors.
The upgrade reflects confidence in nCino's ability to execute its growth plan and improve its financial performance, which could potentially lead to a higher stock valuation in the future.
In other recent news, nCino has reported strong financial results for the second quarter of fiscal year 2025, with total revenues reaching $132.4 million, subscription revenues of $113.9 million, and non-GAAP operating income hitting $19.3 million.
Despite a slowdown in Remaining Performance Obligations growth, nCino's management remains confident in achieving its 50% net booking growth target by the fiscal year 2025.
Analyst firms Macquarie, Piper Sandler, and Keefe, Bruyette & Woods have maintained their positive ratings on nCino's shares, citing the company's consistent performance and potential for growth.
While revenue forecasts remain unchanged, nCino's management has increased its operating income and earnings per share guidance for the fiscal year 2025. These recent developments reflect nCino's commitment to growth and efficiency.
InvestingPro Insights
In light of Raymond James' upgrade of nCino Inc. (NASDAQ: NCNO) to Outperform with a price target of $38.00, recent data from InvestingPro offers additional context for investors considering the stock. nCino's market capitalization stands at $3.46 billion, and while the company is trading at a high EBITDA valuation multiple, it's important to note that it's not currently profitable, with a P/E ratio of -116.81. However, analysts predict the company will be profitable this year, aligning with Raymond James' positive outlook on the company's growth trajectory.
The company has experienced a significant stock price decline over the past week, with a one-week total return of -13.23%. Despite this, the company's revenue growth remains strong, with a 13.64% increase over the last twelve months as of Q2 2025. This is a key metric that supports the firm's belief in nCino's organic growth acceleration. Additionally, InvestingPro Tips indicate that net income is expected to grow this year, which could be a driving factor for the reevaluation of the company's market multiples as anticipated by Raymond James.
For investors seeking further analysis, there are over 7 additional InvestingPro Tips available for nCino, which delve deeper into the company's financial health and future prospects. These tips, along with detailed metrics, can be found on the InvestingPro platform at https://www.investing.com/pro/NCNO.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.