The above button links to Coinbase. Yahoo Finance is not a broker-dealer or investment adviser and does not offer securities or cryptocurrencies for sale or facilitate trading. Coinbase pays us for certain activity generated through this link. Prices displayed are informational.
Investing.com -- Piper Sandler initiated coverage of a group of financial infrastructure and specialized payments companies on Thursday, naming Q2 Holdings as its preferred stock and assigning it an "Overweight" rating, citing recurring revenue growth, improving margins and stronger free-cash-flow conversion.
The brokerage set a $82 price target for Q2 Holdings, implying about 36% upside from its recent share price. It expects the company's earnings growth and margin expansion to drive gains without requiring a return to the elevated valuation multiples the stock commanded historically.
Piper Sandler said Q2's subscription revenue accounted for about 83% of total revenue in the second quarter, up from roughly 73% in the first quarter of 2021. Total annualized recurring revenue rose to about $971 million in the second quarter from roughly $401 million in the fourth quarter of 2019, while remaining performance obligations reached $2.76 billion.
The brokerage also highlighted Q2's core-agnostic platform, which can integrate with incumbent banking systems rather than requiring financial institutions to replace their entire technology stack. It said the company's long-duration contracts, usage-linked pricing and opportunities from bank consolidation could support further expansion within its customer base. Q2 has been selected as the technology provider in more than 90% of customer mergers and acquisitions it has tracked since 2021, according to the report.