What Happened?
Shares of banking software provider nCino (NASDAQ:NCNO) jumped 3.8% in the morning session after the company's Board of Directors authorized a new $100 million stock repurchase program.
This move signaled management's confidence in the business's strength and future outlook. The new buyback followed the full use of a previous stock repurchase authorization. CEO Sean Desmond stated the decision reflected the company's commitment to using its capital to increase stockholder value. The announcement also came after the company reported positive third-quarter results, including revenue growth and margin expansion. A stock buyback reduces the number of shares on the market, which can increase the value of the remaining shares and often suggests that a company's leadership believes its stock is a good investment.
After the initial pop the shares cooled down to $24.21, up 3.5% from previous close.
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What Is The Market Telling Us
nCino’s shares are not very volatile and have only had 8 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business.
The previous big move we wrote about was 3 days ago when the stock dropped 3.5% on the news that some analysts lowered their price targets on the stock, a move that overshadowed the company's better-than-expected third-quarter earnings report and raised financial guidance.
nCino reported quarterly earnings of 31 cents per share, which was well ahead of the 20 cents per share analysts had expected. The company's sales of $152.2 million also beat estimates. Following the strong results, the company raised its forecast for full-year non-GAAP operating income. Despite this positive news, the stock traded lower. The decline appeared linked to actions from some market analysts. For example, Piper Sandler lowered its price target on the stock to $30 from $34, while Truist Financial cut its price target to $27 from $32. These reductions seemed to weigh more heavily on investor sentiment than a price target increase from Keefe, Bruyette & Woods, which raised its target to $36.
nCino is down 27.6% since the beginning of the year, and at $24.21 per share, it is trading 34.8% below its 52-week high of $37.12 from December 2024. Investors who bought $1,000 worth of nCino’s shares 5 years ago would now be looking at an investment worth $268.35.
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