On Friday, Citi updated its stance on Alkami Technology Inc (NASDAQ: ALKT), raising the price target to $37.00 from the previous $32.00, while reiterating a Buy rating on the stock. The adjustment follows a review of the company's latest 10-Q filing and financial results for the quarter ending in June 2024, which indicated a robust demand environment persisting into the September 2024 quarter.
According to the firm's analysis, Alkami is expected to continue its progress in the business banking product area, which is anticipated to enhance its penetration in the bank end market. The revised price target factors in updated multiple assumptions that account for a slight uptick in revenue growth projections and a refreshed set of comparables.
The firm also revised its discounted cash flow (DCF) assumptions, which now include a lower cost of capital. This change, along with the company's growth prospects and margin profile, suggests that Alkami's valuation is reasonable, and the firm expects the stock to experience a gradual increase in value.
Citi's evaluation of Alkami's financial health and market position is based on a comprehensive analysis of the company's recent quarterly performance and forward-looking financial projections. The firm's maintained Buy rating indicates a positive outlook on the stock's potential performance in the market.
In other recent news, Alkami Technology Inc. has made significant strides in its financial performance. The company reported a 25% increase in Q2 2024 revenue, alongside an adjusted EBITDA of $4.6 million. Alkami has also expanded its credit facility, further solidifying its financial standing.
The company has been the focus of several analyst firms, including Craig-Hallum, Lake Street Capital Markets, Needham & Company, and Barclays, all of which have raised their price targets following Alkami's robust financial performance. This is a testament to the company's strong growth trajectory and operational efficiency.
In addition, Alkami has announced a secondary offering of 5 million shares, which are being sold by affiliates of General Atlantic, S3 Ventures, George B. Kaiser, and Brian R. Smith. The company, however, will not gain any proceeds from this sale, as all proceeds will go to the selling stockholders.
In terms of personnel, Alkami recently appointed Prerna Sachdeva as the new principal accounting officer, a move that brings over two decades of experience in global accounting and financial reporting to the company. These recent developments highlight Alkami Technology's ongoing operational and financial progress.
InvestingPro Insights
Alkami Technology Inc's recent performance aligns with Citi's optimistic outlook. According to InvestingPro data, the company has demonstrated strong revenue growth, with a 26.69% increase over the last twelve months as of Q2 2024. This robust growth supports Citi's projection of continued progress in Alkami's business banking product area.
InvestingPro Tips highlight that Alkami operates with a moderate level of debt and has liquid assets exceeding short-term obligations, which could contribute to the firm's positive view on the company's financial health. Additionally, the stock has seen a significant price uptick of 35.95% over the last six months, reflecting market confidence in Alkami's growth trajectory.
While Alkami is not currently profitable, with an adjusted operating income of -$54.22 million in the last twelve months, InvestingPro Tips indicate that analysts predict the company will be profitable this year. This projection aligns with Citi's expectation of gradual value increase and supports the raised price target.
For investors seeking a more comprehensive analysis, InvestingPro offers 10 additional tips for Alkami Technology Inc, providing deeper insights into the company's financial position and market performance.
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