Morgan Stanley has turned more bullish on cloud banking software provider nCino Inc, upgrading the stock to Overweight from Equal Weight and nudging its price target to $36. The firm believes lowered expectations, a stronger product portfolio, and upcoming growth drivers position the company for a faster trajectory.
In a research note, analysts said that the market has become overly cautious on nCino, creating an opportunity to buy into what they describe as a “high-quality vertical software business trading at a discount.” They argue that momentum could build as the company benefits from a pricing transition, product improvements, and a compelling AI strategy.
One key factor highlighted was nCino’s move to a new pricing model. About 21% of annual contract value has already shifted to the updated structure, which includes a one-time 10% price increase at renewal and adjustments linked to client asset growth. Morgan Stanley estimates this model could add roughly two percentage points to subscription revenue growth by fiscal 2027.
On the product front, the brokerage sees encouraging traction. The company’s consumer lending platform landed 43 net new wins in fiscal 2025, signaling demand strength. Meanwhile, Banking Advisor — an AI-powered decisioning and advisory tool — is already being adopted by some of the world’s largest banks, underlining its growth potential.
nCino’s mortgage segment also appears to be stabilizing. Customer churn has slowed, and with more than half of mortgage revenues tied to loan volumes, lower interest rates could deliver an additional boost.
Valuation was another factor driving the upgrade. Morgan Stanley compared nCino’s trading multiple of 5.4 times 2026 revenue with the recent $2 billion private-market acquisition of MeridianLink by Centerbridge at 5.7 times. The deal suggests that nCino is undervalued relative to peers, giving investors a chance to buy in below intrinsic market levels.
“We have built more conviction that the company is poised to deliver a more durable runway of beats and raises,” the analysts said, signaling confidence that earnings surprises may become more consistent.
The upgrade reflects growing optimism that nCino is entering a new phase of execution. With a supportive pricing model, an expanding product set, AI-driven innovation, and improving demand trends, the company could be positioned to deliver above-market returns over the coming years.