What Happened?
Shares of banking software provider nCino (NASDAQ: NCNO) fell 3.5% in the morning session after some analysts lowered their price targets on the stock, a move that overshadowed the company's better-than-expected third-quarter earnings report and raised financial guidance.
nCino reported quarterly earnings of 31 cents per share, which was well ahead of the 20 cents per share analysts had expected. The company's sales of $152.2 million also beat estimates. Following the strong results, the company raised its forecast for full-year non-GAAP operating income. Despite this positive news, the stock traded lower. The decline appeared linked to actions from some market analysts. For example, Piper Sandler lowered its price target on the stock to $30 from $34, while Truist Financial cut its price target to $27 from $32. These reductions seemed to weigh more heavily on investor sentiment than a price target increase from Keefe, Bruyette & Woods, which raised its target to $36.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy nCino? Access our full analysis report here.
What Is The Market Telling Us
nCino’s shares are not very volatile and have only had 8 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business.
The biggest move we wrote about over the last year was 8 months ago when the stock dropped 34.3% on the news that the company reported weak fourth quarter 2024 (fiscal 2025) results as its revenue and EPS guidance for next year fell short of Wall Street's estimates. The quarter was underwhelming, with sales roughly in line with expectations, while earnings missed by a wide margin. The results revealed a continued struggle to turn a profit and manage cash burn, while the guidance suggested a sharp slowdown in growth. Overall, this was a softer quarter.
nCino is down 29.4% since the beginning of the year, and at $23.58 per share, it is trading 37% below its 52-week high of $37.41 from December 2024. Investors who bought $1,000 worth of nCino’s shares 5 years ago would now be looking at an investment worth $269.09.
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