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On Wednesday, Citi analyst Andrew Schmidt adjusted the price target for Alkami Technology Inc (NASDAQ: ALKT) shares, reducing it to $38 from the previous $44, while sustaining a Buy rating for the company’s stock. Currently trading at $27.62, the stock sits between analyst targets ranging from $32 to $54, according to InvestingPro data. Despite recent price weakness, with shares down nearly 25% year-to-date, analysts maintain a strong bullish consensus. The revised valuation by Citi reflects new information from Alkami’s annual report, the recent acquisition of MANTL, and the company’s fourth-quarter earnings.
Schmidt’s analysis indicates that the incorporation of MANTL, which was finalized on March 17, is expected to dilute EBITDA in fiscal year 2025 but reach roughly a breakeven point in fiscal year 2026. The analyst suggested that EBITDA might perform better than anticipated, with revenue growth contributing positively. This optimism aligns with the company’s strong revenue growth of 26% in the last twelve months to $333.85 million, and InvestingPro data shows analysts expect continued sales growth this year. Despite the additional interest expense brought on by the acquisition, Citi’s forecast for Alkami’s adjusted EBITDA in fiscal year 2026 remains unchanged.
The near-term strategy for MANTL includes leveraging cross-selling opportunities within Alkami’s existing customer base and attaching MANTL’s offerings to new clients, with the aim of enhancing bank-related business prospects. Schmidt also highlighted the importance of continuing to secure wins among credit unions and banks.
The banking and credit union sector is known for its resilience against sales cycle fluctuations, and Schmidt underscored the relative stability of this market. Alkami’s high level of recurring revenues, which currently stand at 96% from subscriptions, is particularly advantageous during periods of market volatility. The new target price of $38, down from $44, is primarily based on sector multiples. However, Schmidt pointed out that Alkami’s growth trajectory justifies a premium valuation, reinforcing the Buy rating on the stock. With a market capitalization of $2.82 billion and trading at 7.9x book value, investors seeking deeper insights into Alkami’s valuation and growth prospects can access comprehensive analysis through the InvestingPro Research Report, part of the platform’s coverage of over 1,400 US stocks.
In other recent news, Alkami Technology Inc. reported its fourth-quarter 2024 earnings, revealing a significant miss on earnings per share (EPS) expectations, posting an EPS of -0.08 against the forecasted 0.08. Despite this, revenue for the quarter slightly exceeded expectations at $89.66 million, marking a 26% year-over-year increase. The company also announced a $300 million private offering of convertible senior notes due 2030, with the proceeds primarily earmarked for the acquisition of Fin Technologies, Inc., also known as MANTL. This acquisition is expected to enhance Alkami’s product offerings, particularly in omnichannel account opening solutions, which is anticipated to drive revenue synergies.
Alkami’s collaboration with BioCatch successfully prevented over $54 million in fraudulent transactions in 2024, highlighting the effectiveness of their integrated fraud prevention strategies. Additionally, KeyBanc Capital Markets revised Alkami’s stock price target downward to $45 from $50, maintaining an Overweight rating, following the company’s fourth-quarter revenue report and acquisition plans. The acquisition of MANTL is expected to be accretive to adjusted EBITDA by 2026, according to KeyBanc’s analysis.
Alkami’s fiscal year 2025 guidance for organic revenue was slightly below analyst expectations, though the inclusion of MANTL is projected to enhance the company’s ability to secure new banking clients. The company has set a revenue guidance range of $440-$445 million for 2025, indicating a 32-33% increase, with the MANTL acquisition expected to contribute $30 million in revenue. These developments reflect Alkami’s strategic initiatives to expand its market presence and product offerings in the digital banking sector.
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