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Deutsche Bank's Likes And Dislikes From Nuance Communication's Q3 Print

Deutsche Bank's Likes And Dislikes From Nuance Communication's Q3 Print
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Shares of Nuance Communications Inc. (NASDAQ: NUAN) climbed more than 10 percent after its better-than-expected results for the fourth quarter, driven by strong bookings and recurring revenues.

“With recurring revenue expected to continue growing past 70 percent to 73 percent in FY17 and ‘high 70s’ by FY18, we think NUAN’s multiple will continue to re-rate higher. We reiterate our Buy rating,” Deutsche Bank analyst Nandan Amladi wrote in a note.

Further, the analyst expects more margin expansion as management is simplifying the sales organization structure of mobile unit.

Following are the likes and dislikes of Deutsche Bank from Nuance’s results:


  • “Bookings were strong in 4Q, playing a bit of catch-up from the first half of the year, but still delivering about 3.6 percent vs. initial FY16 guidance of 2–5 percent.”
  • “While revenue/EPS guidance for FY17 is a tad below consensus, NUAN provided early FY18 guidance, unusual for the company, but sensible, given the greater visibility from a growing share of recurring – and very sticky – revenue.”
  • “License growth in Healthcare and Enterprise are ‘outpacing’ declines in the mobile segment.”
  • “CEO Paul Ricci plans to retire at the end of March 2018, by which time the business transformation and revenue transition should be substantially complete.”


  • “The softer bookings in FY16 mean that more substantial organic revenue growth gets pushed out a bit to FY18.”
  • “Management changes appear to be done for the moment, but CEO was circumspect about potentially more changes ahead.”
  • “While the recurring revenue transition appears to be accelerating, metrics disclosure remains somewhat limited for investors to assess how each segment is progressing in its revenue transition.”
  • “Deferred revenue mix between Current and Long-term appears to have stabilized, although the ratio of adjusted net income to cash flow from operations continues to improve.”

At last check, shares of Nuance Communications rose 9.84 percent to $17.08. Amladi reaffirmed its $25 price target on the stock, which has been trading between $13.44 and $21.83 during the past 52 weeks.

Latest Ratings for NUAN

Nov 2017Morgan StanleyUpgradesEqual-WeightOverweight
Aug 2017BarclaysMaintainsOverweight
Aug 2017Raymond JamesMaintainsStrong Buy

View More Analyst Ratings for NUAN
View the Latest Analyst Ratings

Posted-In: Analyst Color Earnings Long Ideas News Price Target Reiteration Analyst Ratings Movers Best of Benzinga


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