Alkami Technology (ALKT): Evaluating Valuation Following New Bank Partnerships and Expanding Digital Platform Adoption

Alkami Technology (ALKT) is in the spotlight after Mascoma Bank and Hanscom Federal Credit Union rolled out its digital banking platform, highlighting the growing adoption of Alkami’s solutions across the financial services industry.

See our latest analysis for Alkami Technology.

Alkami’s shares have seen some sharp swings lately, with a 2.5% gain in the last day and a modest 2.1% share price recovery over the past week. However, momentum has faded in recent months as a 35.6% year-to-date share price drop and a one-year total shareholder return of -37.5% reflect ongoing challenges. Wins such as new client partnerships and digital platform launches show the business is attracting attention. Over the longer term, investors holding since Alkami's IPO have still notched a 53% three-year total return. This has kept bears and bulls debating its growth runway and prospects for a turnaround.

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With shares sitting well below analyst price targets despite new client wins and robust digital banking adoption, investors must ask: Is Alkami undervalued and poised for a rebound, or is the market already pricing in future growth?

Most Popular Narrative: 38.1% Undervalued

Alkami’s most widely-followed valuation narrative places its fair value much higher than the latest close. This points to a notable disconnect between analyst projections and the current market sentiment. Market attention has turned to the company’s ability to drive recurring revenue and increase margins as digital banking transformation accelerates.

Growing expectations for advanced, fraud-resistant, omnichannel digital banking experiences are prompting more financial institutions to adopt Alkami's API-driven, cloud-native architecture. This can support secure growth and higher operating leverage. Over time, this trend should improve gross and operating margin profiles.

Read the complete narrative.

Wondering what’s behind these bullish numbers? This narrative hinges on bold margin expansion and a growth trajectory you might not expect from a mid-cap fintech. The insights behind this valuation, including the profitability assumptions and projected revenue growth, may surprise you. Uncover the figures driving this price target now.

Result: Fair Value of $38.44 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, a shrinking client base or intensified competition from larger fintechs could challenge Alkami’s revenue growth and delay its path to sustained profitability.

Find out about the key risks to this Alkami Technology narrative.

Another View: Market Ratios Tell a Cautionary Story

While analyst models paint Alkami as undervalued, the company’s price-to-sales ratio stands at 6.4x, higher than both the US software industry average of 5.3x and its peers at 5x. Even compared to its fair ratio of 5.6x, Alkami's stock is priced at a premium. This signals the market might be factoring in more growth than current fundamentals support and leaves less room for error if targets are not met. Is the optimism justified, or does it set up possible disappointment?

See what the numbers say about this price — find out in our valuation breakdown.

Build Your Own Alkami Technology Narrative

If you’re not convinced by these narratives or want to dig into the data firsthand, you can craft your own in just a few minutes. Do it your way.

A great starting point for your Alkami Technology research is our analysis highlighting 4 key rewards and 1 important warning sign that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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