BMO Capital has reduced its price target for N‑Able Inc. (NABL) to $5.50 from $9.50 while retaining a Market Perform rating. The brokerage firm flagged concern about the company’s reliance on expected contributions from new products and pointed to lower software sector valuations as a reason for the cut.
The stock is changing hands around $4.62, hovering close to its 52-week low of $4.63, after having dropped roughly 11% during the last week. The market move follows the company’s latest quarterly report and subsequent analyst commentary.
On the operational front, N‑Able outperformed consensus estimates on most December quarter measures and issued fiscal 2026 guidance for top-line growth in constant currency that was broadly in line with BMO Capital’s forecasts. Management said it expects revenue growth in constant currency to accelerate through fiscal 2026.
Despite those topline signals, BMO Capital expressed reservations about the assumed contribution from new products. The firm noted investor unease over the defensibility of the company’s software offerings for mid-market and small and medium-sized business customers, and factored lower software valuations into its revised target.
Recent company results show fourth-quarter fiscal 2025 revenue rose 12% year-over-year to $130 million, modestly above expectations. However, earnings per share missed forecasts, with reported EPS of $0.06 versus an expected $0.10, amounting to a 40% negative surprise on that metric.
Other analysts have reacted by trimming their targets while holding ratings. Needham lowered its price target to $8.00 from $10.00 but kept a Buy rating, citing valuation concerns. Scotiabank cut its target to $5.25 from $8.75 and maintained a Sector Perform rating, describing the company’s growth as respectable but not compelling and characterizing bottom-line results as adequate. Scotiabank also said guidance from N‑Able makes it unlikely that estimates will rise in the near term.
For the full fiscal year ending 2025, N‑Able reported annual recurring revenue growth of 7.7% in constant currency and a foreign exchange-neutral net revenue retention rate of 102%.
Market reaction and analyst commentary reflect a mixed view: revenue momentum and strategic initiatives drew some positive investor response, yet the EPS shortfall, questions about product contribution, and valuation pressures prompted downward revisions to price targets.
Summary
BMO Capital reduced its price target to $5.50 from $9.50 and maintained Market Perform, citing concerns about expected contributions from new products and lower software valuations. N‑Able beat revenue estimates for the December quarter and guided for accelerating constant-currency revenue growth in fiscal 2026, but posted an EPS miss. Multiple other firms have trimmed targets while preserving their respective ratings, reflecting mixed analyst sentiment.
Key points
- BMO cut N‑Able’s price target to $5.50 from $9.50 and left the rating at Market Perform; the firm cited product contribution assumptions and lower software valuations.
- N‑Able reported Q4 fiscal 2025 revenue of $130 million, up 12% year-over-year, but EPS came in at $0.06 versus an expected $0.10.
- Other analysts adjusted price targets downward - Needham to $8.00 from $10.00 (Buy maintained) and Scotiabank to $5.25 from $8.75 (Sector Perform maintained).
Risks and uncertainties
- Uncertainty about the extent to which new product rollouts will contribute to fiscal 2026 revenue - impacts software and technology investors focused on growth assumptions.
- Questions around the defensibility of N‑Able’s software offerings in the mid-market and SMB segments - a risk for customer retention and competitive positioning in those markets.
- Downward pressure from lower software sector valuations - a valuation risk for investors benchmarking N‑Able against peers in the software industry.
Takeaway
The company’s revenue performance and guidance show areas of strength, but the EPS miss and analyst concerns about product contribution and market defensibility have led to a range of price-target reductions and a cautious tone among investors and brokers.