Macquarie Maintains Outperform Rating on nCino Inc. (NCNO) with $40.00 Price Target
Macquarie, one of the leading investment firms, has upheld its Outperform rating on shares of nCino Inc. (NASDAQ: NCNO) with a steady price target of $40.00. Despite a recent selloff in the aftermarket, Macquarie remains positive about the stock's performance. The firm attributes the drop to investor expectations for more aggressive guidance, which was not provided due to limited visibility.
Macquarie describes nCino as "Buyers of prudent growth" and sees any weakness in the stock as an opportunity to increase investment. The firm's optimism is driven by the expectation of accelerated platform adoption for nCino, indicating confidence in the company's growth trajectory.
Analysts at Macquarie believe that nCino is on track to achieve significant milestones, with the statement "nCino remains on pace to hit '50'" reinforcing their positive outlook on the company's future performance. Despite the recent market activity not aligning with Macquarie's stance, the firm's price target reflects the level of performance and valuation they anticipate for nCino.
In the latest financial results, nCino reported strong numbers for the second quarter of fiscal year 2025, with total revenues reaching $132.4 million. Subscription revenues stood at $113.9 million, and non-GAAP operating income hit $19.3 million. While there was a slowdown in Remaining Performance Obligations growth, nCino's management remains confident in achieving its 50% net booking growth target by fiscal year 2025.
Piper Sandler and Keefe, Bruyette & Woods have also maintained positive ratings on nCino's shares, citing consistent performance and attractive valuation. Both firms see potential for growth, especially in the US mortgage business. While revenue forecasts have not changed, nCino's management has increased its operating income and earnings per share guidance for fiscal year 2025.
Analysis and Breakdown
For the average investor, Macquarie's Outperform rating on nCino Inc. (NASDAQ: NCNO) signals a vote of confidence in the company's growth prospects. With a market cap of $3.45 billion, nCino's revenue growth remains strong, showing a 14.77% increase over the last twelve months as of Q1 2023. Although the company has not been profitable recently, analysts predict a turnaround this year, aligning with Macquarie's positive outlook.
InvestingPro Tips suggest that while nCino's stock is relatively stable in terms of price volatility, it is trading at a high revenue valuation multiple, indicating high market expectations. Additionally, with some analysts revising their earnings estimates downward, investors should monitor these changes for potential impact on the stock's performance.
Furthermore, nCino's operating income margin and return on assets show areas for improvement, with negative figures indicating room for enhancement in operational efficiency and asset utilization. As the company aims to achieve significant milestones, these metrics will be crucial for investors to track to gauge its financial health and growth potential.