- Stephens analyst Charles Nabhan reiterated an Equal-Weight (Volatile) on Q2 Holdings, Inc (NYSE:QTWO) and a $55 price target.
- With several proposed transactions still awaiting approval, he views M&A involving QTWO customers as a critical variable to the '23 outlook.
- The company overwhelmingly (~90%) finds itself on the acquiring side of transactions, he noted.
- He found it should benefit from the conversion of new users, more significant cross-sell potential and pent-up demand from purchases delayed during the approval process.
- However, it is essential to note that integration may take place months after the deal closes and that initial revenue may be weighted towards professional service fees, resulting in a headwind to margins.
- He issued the note as a correction and removed any analysis around incremental users or revenue or mention of specific customers.
- Price Action: QTWO shares traded higher by 3.45% at $32.67 on the last check Wednesday.
