nCino (NCNO): Assessing Valuation After Macro Tailwinds Boost Tech Stocks

Shares of nCino (NCNO) surged 4.5% following Federal Reserve Chair Jerome Powell's comments hinting that interest rate cuts might be on the way. This news comes alongside a broader tech rally, sparked not by company-specific developments but by macro tailwinds. Additionally, a 90-day delay on pending higher tariffs for Chinese goods has contributed to a meaningful shift in sentiment for the sector, giving investors plenty to consider as nCino rides the wave.

In the bigger picture, nCino’s stock has moved higher over the past month, but the year hasn’t been as kind, with shares still down more than 16% from a year ago. Momentum picked up in the past three months as broader policy updates and easing trade worries brought tech back into focus. Still, longer-term performance lags behind the highs investors saw several years ago, and there have been no recent company-specific surprises to change the narrative.

So, after another rally driven by macro events, it’s time to ask whether the current price undervalues nCino’s actual prospects or if markets are already expecting faster growth ahead.

Most Popular Narrative: 9.1% Undervalued

According to community narrative, nCino is considered undervalued, with the current share price trailing behind consensus analyst fair value. Analysts see catalysts on the horizon and maintain a positive outlook even as market momentum remains mixed.

Ongoing digital transformation initiatives within global banking, combined with nCino's robust international expansion and notably strong performance in Europe and Japan, position the company to benefit from the continued migration of financial institutions from legacy systems to cloud-based SaaS platforms. This supports the potential for multi-year revenue growth.

Curious why analysts value nCino above today’s price? This narrative highlights sector transformation and ambitious financial forecasts, tied to significant international expansion and a quicker path to profitability. Interested in which projections support this view? It may be informative to review the underlying future assumptions powering this optimistic target.

Result: Fair Value of $32.00 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, longer customer deployment cycles and increased competition could present challenges for nCino's ability to sustain its momentum and achieve the expected growth targets.

Find out about the key risks to this nCino narrative.

Another View: Discounted Cash Flow Analysis

While the current narrative focuses on analyst forecasts and price targets, our DCF model offers a different perspective. It still points to undervaluation, but relies on projected future cash flows rather than market multiples. Which approach tells the real story?

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out nCino for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own nCino Narrative

If you have a different perspective or want to dig deeper into the numbers, you can build a personal outlook in just a few minutes and do it your way.

A great starting point for your nCino research is our analysis highlighting 3 key rewards and 1 important warning sign that could impact your investment decision.

Looking for More Winning Investment Ideas?

Why limit your portfolio to just one opportunity? Tap into a world of promising stocks that could power your next big move. Use the Simply Wall Street Screener to focus on innovative companies and strategies that align with your goals and discover what many investors are currently overlooking:

• Maximize your income potential by targeting steady performers with dividend stocks with yields > 3% delivering yields above market averages and demonstrating proven resilience.
• Accelerate your growth strategy with AI penny stocks by accessing companies shaping the future of artificial intelligence and emerging technologies.
• Transform your investment approach by seeking stable returns with healthcare AI stocks which features innovative leaders at the intersection of healthcare and advanced AI.

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.

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