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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