On Thursday, Needham & Company adjusted its outlook on Alkami Technology Inc (NASDAQ: ALKT), raising the price target to $43 from the previous $32, while reiterating a Buy rating for the stock.
The revision follows Alkami's second-quarter 2024 performance, which surpassed Wall Street expectations in terms of both revenue and EBITDA. This success was attributed to strong demand and effective sales execution.
Alkami, a provider of cloud-based platforms for financial institutions, reported a significant 28% year-over-year increase in subscription revenues for the second quarter. The company also secured eight new clients, including four banks and four credit unions.
Notably, one of these new clients is projected to become one of Alkami's top contributors in annual recurring revenue.
The positive results have led Alkami to provide a confident third-quarter outlook and to uplift its full-year 2024 guidance for both revenue and EBITDA. Despite the company's shares trading at a relatively high enterprise value to fiscal year 2025 revenue multiple of approximately 8 times,
Needham sees potential for a premium valuation. The firm suggests that Alkami's leading growth prospects and transparent financial model could justify a multiple of 10 times their fiscal year 2025 revenue estimate.
InvestingPro Insights
Alkami Technology Inc's (NASDAQ: ALKT) recent performance has caught the attention of analysts and investors alike. The company's stock has been buoyed by solid revenue growth and strategic client acquisitions, as highlighted by its second-quarter results. In line with this, InvestingPro data reveals a robust 28.01% revenue growth in the last twelve months as of Q1 2024, underscoring the company's expanding financial footprint.
InvestingPro Tips for ALKT suggest that the company is trading at a high revenue valuation multiple, with a Price / Book ratio of 9.88, indicating that the market has high expectations for its future growth. Additionally, analysts have revised their earnings upwards for the upcoming period, reflecting optimism about Alkami's profitability prospects. This is further supported by the company's strong return over the last year, with a 95.52% price total return, demonstrating significant investor confidence.
For those looking for more in-depth analysis and additional insights, there are over ten InvestingPro Tips available, which can be accessed for Alkami Technology Inc at https://www.investing.com/pro/ALKT. These tips could provide valuable context for investors considering Alkami's stock, especially in light of the recent price target upgrade by Needham & Company.
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