Alkami Technology (ALKT) is back in focus after Citizens Bank expanded its relationship with the company by selecting MANTL, an Alkami solution team, to overhaul deposit account opening for retail and business customers.

The expanded Citizens Bank partnership lands during a mixed share price patch for Alkami, with the stock at US$17.79 after a 1-month share price return of 10.09% but a year to date share price return that is down 21.56%. The 1-year total shareholder return has fallen 38.53% compared with a 3-year total shareholder return of 17.27%.

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With Alkami delivering solid revenue growth but still reporting losses, and the stock trading below analyst price targets and some intrinsic value estimates, you need to ask: is this a discounted growth story, or are markets already pricing in what comes next?

Most Popular Narrative: 120% Undervalued

With Alkami closing at $17.79 against a widely followed fair value estimate of $18.00 using a 9% discount rate, the current set up rests on how much faith you put in the bearish analyst case that underpins that number.

Although Alkami is benefiting from the acceleration of digital banking adoption, highlighted by strong user growth and demand from regional and community banks, the company remains heavily exposed to ongoing consolidation and M&A activity in the US banking sector. As smaller banks merge or are acquired, the core customer base may contract, potentially reducing Alkami's total addressable market and constraining revenue growth over the long term.

Want to see what keeps this growth story in play despite customer concentration concerns and sector pressure on software valuations? The core of this narrative rests on a detailed revenue ramp, margin rebuild, and earnings profile that aim to justify a higher long term earnings multiple without assuming blue sky outcomes.

Result: Fair Value of $18 (UNDERVALUED)

However, this hinges on regional bank consolidation not accelerating too sharply, and on competition plus higher compliance costs not squeezing margins more than analysts currently factor in.

Another Way To Look At Value

The first valuation leans on analyst earnings forecasts and a fair value of $18, which frames Alkami as slightly undervalued. A different take uses revenue multiples, where the current P/S of 4x sits above a fair ratio of 3.4x and above peers at 3.6x and the US Software industry at 3.9x. That gap points to less room for error if revenue or profitability fall short. The question is which signal you treat as the anchor.

Next Steps

If this mix of cautious and optimistic signals feels familiar, use it as a prompt to check the numbers yourself and move quickly while sentiment is still mixed. Then round out your view with 3 key rewards

Looking for more investment ideas?

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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.