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Needham & Co. Downgrades Nuance (NUAN) to Hold, Notes Margin & Rev Weakness

February 8, 2013 8:02 AM EST Send to a Friend
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Price: $15.13 --0%

Rating Summary:
    4 Buy, 11 Hold, 0 Sell

Rating Trend: = Flat

Today's Overall Ratings:
    Up: 16 | Down: 12 | New: 14
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Shares of Nuance Communications (Nasdaq: NUAN) are lower by more than 15 percent pre-market on Friday. The speech software company reported Q1 results yesterday that were mixed, with guidance coming in below expectations. In response, Needham and Company downgraded the stock to Hold from Buy, noting margin and revenue concerns.

"Last night, we heard gross margins for FY13 would be down 200-250 bps, where previous outlook had been a 100-200 bp decline. On the revenue front, investors are asked to wait for 'back-end loaded' revenue from mobile consumer projects, and now health care revenues may be back end loaded as well, due to budget weakness and inertia as hospitals pursue ICD-10 standards. In our view, the combination of protracted EMEA weakness, accelerating margin pressure, and back-end loaded revenue forecast, makes it difficult to have a firm EPS growth thesis, as we expect continued margin erosion," said analyst Scott Zeller.

For an analyst ratings summary and ratings history on Nuance Communications (Nasdaq: NUAN) click here. For more ratings news on Nuance Communications click here.

Shares of Nuance Communications closed at $24.55 yesterday.




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