Investors in nCino, Inc. (NASDAQ:NCNO) had a good week, as its shares rose 9.6% to close at US$69.38 following the release of its yearly results. Sales hit US$204m in line with forecasts, although the company reported a statutory loss per share of US$0.46 that was somewhat smaller than the analysts expected. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.
Following the latest results, nCino's eight analysts are now forecasting revenues of US$253.7m in 2022. This would be a huge 24% improvement in sales compared to the last 12 months. Losses are expected to increase substantially, hitting US$0.53 per share. Yet prior to the latest earnings, the analysts had been forecasting revenues of US$246.4m and losses of US$0.45 per share in 2022. While this year's revenue estimates increased, there was also a noticeable increase in loss per share expectations, suggesting the consensus has a bit of a mixed view on the stock.
Spiting the revenue upgrading, the average price target fell 7.6% to US$86.25, clearly signalling that higher forecast losses are a valuation concern. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. The most optimistic nCino analyst has a price target of US$100.00 per share, while the most pessimistic values it at US$75.00. With such a narrow range of valuations, the analysts apparently share similar views on what they think the business is worth.
One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. We would highlight that nCino's revenue growth is expected to slow, with the forecast 24% annualised growth rate until the end of 2022 being well below the historical 34% 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) 12% 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 increased their loss per share estimates for next year. Happily, they also upgraded their revenue estimates, and are forecasting revenues 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.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. At Simply Wall St, we have a full range of analyst estimates for nCino going out to 2024, and you can see them free on our platform here..
That said, it's still necessary to consider the ever-present spectre of investment risk. We've identified 2 warning signs with nCino , and understanding them should be part of your investment process.
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This article by Simply Wall St is general in nature. 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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