Earnings Release: Here's Why Analysts Cut Their nCino, Inc. (NASDAQ:NCNO) Price Target To US$31.00
It's been a good week for nCino, Inc. (NASDAQ:NCNO) shareholders, because the company has just released its latest full-year results, and the shares gained 5.2% to US$23.26. Sales hit US$408m in line with forecasts, although the company reported a statutory loss per share of US$0.93 that was somewhat smaller than the analysts expected. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.
View our latest analysis for nCino
Taking into account the latest results, the current consensus from nCino's twelve analysts is for revenues of US$479.4m in 2024, which would reflect a meaningful 17% increase on its sales over the past 12 months. Losses are predicted to fall substantially, shrinking 68% to US$0.29. Before this earnings announcement, the analysts had been modelling revenues of US$480.5m and losses of US$0.31 per share in 2024. It looks like there's been a modest increase in sentiment in the recent updates, with the analysts becoming a bit more optimistic in their predictions for losses per share, even though the revenue numbers were unchanged.
Even with the lower forecast losses, the analysts lowered their valuations, with the average price target falling 13% to US$31.00. It looks likethe analysts have become less optimistic about the overall business. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. The most optimistic nCino analyst has a price target of US$44.00 per share, while the most pessimistic values it at US$22.00. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.
Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. It's pretty clear that there is an expectation that nCino's revenue growth will slow down substantially, with revenues to the end of 2024 expected to display 17% growth on an annualised basis. This is compared to a historical growth rate of 31% over the past five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 12% annually. So it's pretty clear that, while nCino's revenue growth is expected to slow, it's still expected to grow faster than the industry itself.
The Bottom Line
The most important thing to take away is that the analysts reconfirmed their loss per share estimates for next year. Fortunately, they also reconfirmed their revenue numbers, suggesting sales are tracking in line with expectations - and our data suggests that revenues are expected to grow faster than the wider industry. Furthermore, the analysts also cut their price targets, suggesting that the latest news has led to greater pessimism about the intrinsic value of the business.
Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. At Simply Wall St, we have a full range of analyst estimates for nCino going out to 2025, and you can see them free on our platform here..
And what about risks? Every company has them, and we've spotted 2 warning signs for nCino you should know about.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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