This Analyst Thinks M&A Involving Q2 Holdings Customers Key Variable To Outlook

Stephens analyst Charles Nabhan reiterated an Equal-Weight (Volatile) on Q2 Holdings, Inc 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.

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