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Analyst Estimates: Here's What Brokers Think Of nCino, Inc. (NASDAQ:NCNO) After Its Third-Quarter Report

·3-min read

nCino, Inc. (NASDAQ:NCNO) defied analyst predictions to release its third-quarter results, which were ahead of market expectations. It looks like a positive result overall, with revenues of US$70m beating forecasts by 5.1%. Statutory losses of US$0.14 per share were 5.1% smaller than the analysts expected, likely helped along by the higher revenues. 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. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on nCino after the latest results.

Check out our latest analysis for nCino

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Following the latest results, nCino's ten analysts are now forecasting revenues of US$326.5m in 2023. This would be a sizeable 28% improvement in sales compared to the last 12 months. Losses are predicted to fall substantially, shrinking 23% to US$0.43. Before this latest report, the consensus had been expecting revenues of US$326.5m and US$0.43 per share in losses.

The consensus price target was unchanged at US$82.67, suggesting that the business - losses and all - is executing in line with estimates. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. There are some variant perceptions on nCino, with the most bullish analyst valuing it at US$100.00 and the most bearish at US$77.00 per share. The narrow spread of estimates could suggest that the business' future is relatively easy to value, or thatthe analysts have a strong view on its prospects.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. We would highlight that nCino's revenue growth is expected to slow, with the forecast 22% annualised growth rate until the end of 2023 being well below the historical 33% p.a. growth over the last three years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 15% per year. Even after the forecast slowdown in growth, it seems obvious that nCino is also expected to grow faster than the wider industry.

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. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.

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. We have estimates - from multiple nCino analysts - going out to 2024, and you can see them free on our platform here.

We don't want to rain on the parade too much, but we did also find 3 warning signs for nCino that you need to be mindful of.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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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