Challenges in Mortgage Segment Hurt nCino, Analyst Downgrades Stock
Piper Sandler analyst Brent A. Bracelin downgraded nCino, Inc. (NASDAQ:NCNO) to Neutral from Overweight, with a price forecast of $38.
The company reported total revenues for the third quarter of $138.8 million, a 14% increase from the previous year. Subscription revenues also grew 14% year-over-year to $119.9 million, with a non-GAAP operating margin of 20%, up approximately 350 basis points.
After the results, Bracelin reduced the 2025 revenue outlook by about $20 million due to lower mortgage and core assumptions, partly offset by FullCircl revenue.
Despite the AMC sell-off and a portion of recent gains being lost, the analyst lowered the rating but will monitor cross-sell momentum and the potential recovery in mortgage volumes in the second half of 2025.
Also Read: Tesla’s Path To $400: Bank Of America Highlights EV, AI Growth
The analyst noted that unexpected churn in the mortgage segment (15% of sales) outweighed a $6 million quarter-over-quarter revenue increase. This was the largest sequential revenue gain in over two years.
The analyst highlighted that strong cost management, even with the integration of DocFox, led to a significant margin improvement, reaching a record 20.2%, which was much higher than the previous quarter’s 14.6%, first quarter’s 19.1% and the mid-point guidance of 15.7%.
The analyst expects fourth-quarter mortgage segment growth to slow to 3.5% from 16% last quarter.
This slower growth for a $74 million product category lowers expectations for a recovery next year until mortgage volumes significantly improve, Bracelin adds.
The analyst revised FY25 revenue estimates down to $539.8 million from $541.5 million, but raised the EPS estimate to 72 cents from 69 cents.
Price Action: NCNO shares are trading lower by 12.10% to $37.36 at the last check Thursday.
Read Next:
Latest Ratings for NCNO
Date | Firm | Action | From | To |
|---|---|---|---|---|
Jan 2022 | Keybanc | Maintains | Overweight | |
Jan 2022 | Piper Sandler | Maintains | Overweight | |
Jan 2022 | Barclays | Maintains | Equal-Weight |
View More Analyst Ratings for NCNO
View the Latest Analyst Ratings
"ACTIVE INVESTORS' SECRET WEAPON" Supercharge Your Stock Market Game with the #1 "news & everything else" trading tool: Benzinga Pro - Click here to start Your 14-Day Trial Now!
Get the latest stock analysis from Benzinga?
This article Challenges in Mortgage Segment Hurt nCino, Analyst Downgrades Stock originally appeared on Benzinga.com
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
