FBR Capital Markets Reiterates Market Perform, Lowers Price Target On Nuance Communications on Mixed December Results

In a report published Friday, FBR Capital Markets analyst Daniel H. Ives reiterated a Market Perform rating on

, but lowered the price target from $18.00 to $16.00. In the report, FBR Capital Markets noted, "Last night, February 5, Nuance Communications, Inc. (NUAN) delivered mixed December (F1Q15) results, with both the top and bottom lines coming in ahead of the Street while net new bookings experienced weakness due to the delayed timing of expected contracts as well as currency headwinds. Furthermore, although the company lowered top-line guidance for FY15, management indicated ramping up its ongoing focus on cost controls, as longer sales cycles and the company's transition to on-demand solutions appear to be occurring at a more rapid rate than expected. "In terms of the December quarter, Nuance posted better-than-expected results in its mobile and consumer segment, while its all-important healthcare segment came in below the Street given ongoing volume declines from traditional dictation solutions and the transition to on-demand solutions. Although we would characterize the December quarter/FY15 top-line guidance as a mixed bag in terms of progress toward the company's transition story, we ultimately believe Nuance is heading in the right direction with its shift to cloud solutions, given the potential for improved visibility over the long term for the company (and its investors) with more recurring revenue (66% of revenue in F1Q15, up from 54% in F1Q13) front and center." Nuance Communications closed on Thursday at $14.31.