Needham & Company reiterates a 'Buy' on Nuance Communication (NUAN); Did NUAN Pass on Acquiring MModal (MODL)?

July 6, 2012 8:21 AM EDT
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Needham & Company reiterates a 'Buy' on Nuance Communications (NASDAQ: NUAN) price target of $36.00.

Analyst, Scott Zeller, said, "While the headlines reads that MModal (Nasdaq: MODL) was sold at an 8% premium and NUAN paid a 30% premium for Transcend Services (Nasdaq: TRCR), we believe the revenue multiple was similar. NUAN paid $300m for what they believe is a $140-150m annual future revenue run-rate, or roughly 2x. MODL’s trailing 12 months revenue was roughly $450m, or 2.4x the $1.1B purchase price; on a forward revenue basis of about $503m, MODL’s deal price is roughly 2.1x."

Zeller asked the question - Did NUAN pass on acquiring MODL? There was no official comment from the company. It is worth noting that Transcend is more services-heavy and did not have significant voice technology. MODL, however, has its own voice technology for medical transcription, in addition to professional services capability. It is possible NUAN may have avoided MODL due to a question of HSR-related questions of voice technology in medical transcription market.

For an analyst ratings summary and ratings history on Nuance Communications click here. For more ratings news on Nuance Communications click here.

Shares of Nuance Communications closed at $23.61 yesterday.

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