Goldman Sachs bullish on nCino stock as margin expansion and partnerships align

On Wednesday, Goldman Sachs made a bullish move on nCino Inc. (NASDAQ:NCNO) stock, upgrading the cloud banking software firm from Neutral to Buy. Accompanying the upgrade was a significant increase in the price target, which was raised to $42.00 from the previous $34.00.

The financial institution highlighted several factors that could contribute to nCino’s success despite recent business challenges and peaking interest rates. One key element is the expected reduction in mortgage customer churn. Additionally, Goldman Sachs anticipates an acceleration in the contribution from nCino’s emerging non-core products.

Stability in nCino’s core commercial lending business is also predicted to support the company’s growth trajectory. The renewed partnership with Salesforce (NYSE:) is seen as another positive development that could benefit nCino. Moreover, the firm is on track for continued margin expansion, aiming to meet its ‘Rule of 50’ target, which refers to achieving combined revenue growth and profit margins amounting to 50%.

Goldman Sachs noted that nCino has lagged behind its peers in the bank technology space by 48 points year-to-date. However, the firm believes that the aforementioned factors, along with nCino’s history of innovation (including artificial intelligence), its partner ecosystem, and established relationships with large financial institutions (FIs), position the company to potentially narrow this performance gap. This outlook is set against what Goldman Sachs considers a robust environment for bank IT spending.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.