2023-07-12 11:46:39 ET
Alkami Technology ( NASDAQ: ALKT ) stock advanced 3.5% and Q2 Holdings ( NYSE: QTWO ) stock gained 2.4% in Wednesday midday trading after Goldman Sachs assigned Buy ratings to the two bank technology platforms in new coverage of the sector.
nCino ( NASDAQ: NCNO ), which received a Neutral rating, slipped 0.5% .
While financial institutions have typically been slower than other verticals in adopting cutting-edge technologies, "we take the long-term view that under-investment amongst legacy technology cores and growing demand for digital experiences and security will drive a long-term compounding benefit towards cloud-based vendors outside of the core," Goldman analyst Adam Hotchkiss wrote in a note to clients.
Even though both QTWO and ALKT stocks have risen since the banking turmoil in March, "we see room for further outperformance" as they take advantage of healthy underlying demand and "increasingly gain economies of scale, providing profitability and valuation support."
In addition, smaller financial institutions and credit unions have fared well after the recent industry challenges, favoring Q2 ( QTWO ) and Alkami ( ALKT ), he added.
The SA Quant system has an opposite view on the stocks; it rates nCino ( NCNO ) a Buy and Alkami ( ALKT ) and Q2 ( QTWO ) as Holds as seen in the peer comparison tool. Meanwhile, the average Wall Street rating has Buy ratings on QTWO and NCNO, with a Strong Buy on ALKT.
More on Q2, Alkami, and nCino:
- nCino: A Takeover Might Be at a Not-So-Generous Valuation
- Q2 Holdings gain amid report of takeover interest for peer nCino
- Alkami Sidesteps Bank Failures but U.S. Financial System Sees Loan Drop
- Q2 Holdings: Eyes on Investor Sentiment and M&A Opportunities
- Q2 Holdings upgraded to Buy at BTIG as commercial unit gains momentum
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Alkami, Q2 Holdings nab Buy ratings at Goldman in new coverage