Wedbush Remains Positive On NICE Systems After Management Meetings, Reiterates Outperform

In a report published Sunday, Wedbush analysts Shyam Patil and Andy Cheng share some thoughts about NICE-Systems Limited NICE following their meetings with the company’s management.

The analysts highlight the “positive tone around demand environment and growth prospects.” They “continue to believe that the company is in the early innings of a multi-year, multi-product driven growth acceleration story,” and highlight that since a CEO took over the position, growth has been steadily improving. They believe “the primary driver will be uptake of NICE’s advanced analytics solutions, which represent ~50% of new bookings and are growing 20%+ y/y.”

The research firm also notes that margins have space to move higher. The estimates point to 50-100 bps of annual operating margin expansion as a reasonable measure, with the potential for upside, and specialists highlight that, given that the company recently crossed the 20 percent threshold, they believe “the mid-20s is achievable over the coming years.”

In addition, the firm thinks NICE remains focused on M&A activity (“both tuck-in and larger opportunities, though timing is difficult to gauge”), and on “optimizing its capital structure.”

Wedbush estimates earnings of $1,075.40 per share for 2015, and $1,181.50 per share for 2016. The firm maintains an Outperform rating and a $60 price target based on 17x 2016 EPS estimate.