Alkami Technology ( NASDAQ: ALKT ) stock advanced 2% in early Thursday afternoon trading after Stephens analyst Charles Nabhan started coverage of the cloud-based banking platform with an Outperform rating, citing its scalable business alongside a favorable industry backdrop.
While ALKT shares fell nearly 35% in the past year, Nabhan expects the company to generate over 25% revenue growth over the medium term driven by 15%-20% user growth and 5%-10% average revenue per unit ("ARPU") expansion, he wrote in a note to clients.
He sees a defined path to ALKT's profitability based on: "1) operational efficiency, 2) cross-sell of newer, higher margin solutions, and 3) incremental margins on renewals."
And despite an uncertain macroeconomic backdrop, Nabhan does not "see no signs of deceleration in bank IT spend." In fact, the analyst estimates spending on digital to grow by mid-high-single digits in 2023, "as a shift in consumer preference and growing competition from large cap banks and Fintechs have raised the bar on technology."
Nabhan's Outperform rating is in line with the Quant rating of Buy, with the best marks in momentum and revisions, as well as the average Wall Street Analyst rating of Buy.
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Alkami Technology nabs Overweight rating at Stephens on prospects for user, ARPU growth