Goldman Sachs raises nCino stock price target to $29 on strong earnings

nCino Inc. (NCNO) reported robust Q2 FY26 results, surpassing revenue and EPS estimates, primarily driven by strong subscription performance in mortgage services and core commercial. Goldman Sachs subsequently raised its price target to $29 from $27 while maintaining a Neutral rating, citing the positive quarter but expressing caution regarding decelerating organic subscription revenue growth and increasing reliance on new product execution amidst an uncertain lending environment, which complicates the outlook for fiscal 2026 and 2027. Despite the stock's significant August gains, including an 8.6% jump today, it experienced a minor decline in after-hours trading.

Analysis

nCino Inc. delivered a strong second-quarter fiscal 2026 performance, with revenue of $148.8 million and EPS of $0.22 both surpassing consensus expectations of $143.18 million and $0.14, respectively. This outperformance was primarily fueled by subscription revenue, aided by mortgage services and foreign exchange tailwinds. In response, Goldman Sachs raised its price target to $29.00 from $27.00 but maintained a Neutral rating, reflecting underlying concerns despite the positive results. The firm highlighted a deceleration in organic, constant currency subscription revenue growth (excluding mortgage) from approximately 9% in Q1 to 6-7% in Q2. This, combined with the company's increasing reliance on new product execution within an uncertain lending environment, complicates the forward outlook. While there are encouraging signs of adoption for the new 'Banking Advisor' product (over 80 customers) and the new pricing model (21% of annual contract value), the stock's valuation appears stretched with an EV/EBITDA multiple of 110.5x, especially following an 80%+ gain in August alone. The minor stock decline in after-hours trading suggests the market is weighing these execution risks and the premium valuation against the strong quarterly beat.

Key Decisions for Investors

• Investors should weigh the strong Q2 earnings beat against the stock's premium valuation, reflected in the 110.5x EV/EBITDA multiple and the significant 80%+ price appreciation in August.
• It is critical to monitor the organic, constant currency subscription revenue growth rate, as its recent deceleration to 6-7% represents a key risk to the core business outlook.
• Given the company's increasing reliance on new offerings, track the customer adoption rates for the 'Banking Advisor' product and the new pricing model as key indicators of future growth potential amid a challenging lending environment.
• The Neutral rating from Goldman Sachs, despite a price target increase, suggests a cautious stance may be warranted; holding existing positions may be more prudent than initiating new ones until a reacceleration in core growth is evident.