StockStory Questions Growth Prospects at Three Software Firms

StockStory highlighted concerns about Paychex, nCino and Health Catalyst, arguing that investors should be cautious about software companies as AI may commoditize some products. The publisher noted SaaS stocks had risen 47.2% over six months, compared with a 21.4% gain for the S&P 500.

For Paychex, StockStory pointed to average annual revenue growth of 9.4% over five years and forecast sales growth of 5.3% over the next 12 months. It also noted the company’s operating margin improved by 1.2 percentage points over the past year. The article put the stock at 5.2 times forward sales.

The publisher cited nCino’s average billings growth of 9.6% over the past year and projected sales growth of 7.9% over the next 12 months. It also said the company’s 62.2% gross margin was below competitors. nCino traded at 3.1 times forward sales, according to the article.

For Health Catalyst, StockStory highlighted billings that had declined by an average of 14.4% over the past year and a gross margin of 51.2%. The author also said extended payback periods on sales investments pointed to inefficient conversions. The article valued the stock at 0.6 times forward sales.