JP Morgan Thinks Nice Systems Is Worth $72/Share On Multiple Growth Engines

In a report published Wednesday, JP Morgan analyst Paul Coster upgraded the rating on

from Neutral to Overweight, while raising the price target from $68 to $72. The analyst expressed his optimism regarding the new management team, as well as the company's ability to accelerate its growth, expand its TAM and achieve operating leverage. At the Analyst Day held on June 2, the company said that it was confident of being able to triple its TAM to about $12 billion via a variety of growth drivers, including workforce optimization. The company also expects to "expand its financial crime and compliance (FCC) and security TAMs to ~$3bn each, up from $1bn each today," Coster said. Nice-Systems also believes that will be able to grow its FCC TAM three-fold by achieving dominance in the risk operations segment, "serving tier-2 financial institutions and services, addressing the convergence of fraud and cyber, and expanding into non-financial services verticals." According to the JP Morgan report, "The company believes that market trends continue to work in NICE's favor including new regulations, very large fines for compliance breaches, new enforcement of tier-2 institutions, mobile banking, emerging payment types, cloud, and the convergence of cyber and crime." The company also intends to triple its Security TAM with the addition of more sensors for cyber and tactical security, while also expanding its portfolio to holistic investigation rather than just incident capture. The company also intends to scale into the rapidly growing digital evidence market. In addition, Nice-Systems believes that it can triple its workforce optimization TAM through the expansion of its multi-channel offering, while also growing its cloud solutions and analytics offerings. The company also intends to increase its presence in the mid-market segment.