Canaccord Genuity 2012 Top Picks in Enterprise Software: salesforce.com (CRM) & Nuance (NUAN)
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Price: $209.17 +1.82%
Rating Summary:
48 Buy, 20 Hold, 4 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 8 | Down: 5 | New: 26
Rating Summary:
48 Buy, 20 Hold, 4 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 8 | Down: 5 | New: 26
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Canaccord Genuity 2012 Top Picks in Enterprise Software
Analyst, Richard Davis, said, "Salesforce.com (NYSE: CRM)(BUY): The cloud juggernaut - CRM, which is hardly an unknown name, could be one of a very few large cap software companies that not only produces organic revenue growth greater than 25% but also has the very real chance of showing accelerating organic growth as 2012 progresses. In this world of severe stock price punishment when a company misses a consensus number – guided or not – we expect CRM to consistently beat consensus results rather than boosting its outlook to set “stretch” targets. After all, look at the overwrought reaction to the firm’s “miss” of calculated billings as deferred revenues fell short of the sell-side consensus. Deferred revenues are nearly impossible to predict on a quarterly basis (as they fall victim to changes in currency, timing of renewals, changes in invoicing, etc.) and the calculated billing methodology often misstates real bookings – sometimes showing growth greater than actual billings, and sometimes less. Some investors have retorted that calculated billings is “at least a metric” that you can calculate, even if it is wrong. While we’re forced to track calculated billings, we prefer not to use approximate data to pick stocks – we’ll stick to metrics like revenue growth, cash flow, and outlook commentary."
"Nuance Communications (Nasdaq: NUAN)(BUY) passed a milestone this year. We were following company in 1999 when it began an odyssey into the speech recognition business with the acquisition of Lernout & Hauspie out of bankruptcy. Over the next ten years, Nuance pursued a measured but relentless strategy of acquisition, integration, and internal development to emerge as the world’s undisputed leader in speech technology."
"Of course, being a leader in a modest sized segment is interesting, but hardly the stuff of sustained and significant stock price outperformance. Investors always looked at Nuance as a slightly off the beaten path company that did a bunch of acquisitions; it was a nice trading vehicle. All of that changed with the introduction of Apple’s (Nasdaq: AAPL) Siri on the iPhone 4s."
"The ability to take speech technology from basic recognition to natural language processing to a service that can achieve an “outcome” when you do a search is far more valuable than most people expected. Much as it has in the past, Apple built on existing technologies and delivered a breakthrough that people suddenly realized they wanted. In the case of Apple, it is Siri, a voice-activated personal assistant service that Nuance helps to power."
Analyst, Richard Davis, said, "Salesforce.com (NYSE: CRM)(BUY): The cloud juggernaut - CRM, which is hardly an unknown name, could be one of a very few large cap software companies that not only produces organic revenue growth greater than 25% but also has the very real chance of showing accelerating organic growth as 2012 progresses. In this world of severe stock price punishment when a company misses a consensus number – guided or not – we expect CRM to consistently beat consensus results rather than boosting its outlook to set “stretch” targets. After all, look at the overwrought reaction to the firm’s “miss” of calculated billings as deferred revenues fell short of the sell-side consensus. Deferred revenues are nearly impossible to predict on a quarterly basis (as they fall victim to changes in currency, timing of renewals, changes in invoicing, etc.) and the calculated billing methodology often misstates real bookings – sometimes showing growth greater than actual billings, and sometimes less. Some investors have retorted that calculated billings is “at least a metric” that you can calculate, even if it is wrong. While we’re forced to track calculated billings, we prefer not to use approximate data to pick stocks – we’ll stick to metrics like revenue growth, cash flow, and outlook commentary."
"Nuance Communications (Nasdaq: NUAN)(BUY) passed a milestone this year. We were following company in 1999 when it began an odyssey into the speech recognition business with the acquisition of Lernout & Hauspie out of bankruptcy. Over the next ten years, Nuance pursued a measured but relentless strategy of acquisition, integration, and internal development to emerge as the world’s undisputed leader in speech technology."
"Of course, being a leader in a modest sized segment is interesting, but hardly the stuff of sustained and significant stock price outperformance. Investors always looked at Nuance as a slightly off the beaten path company that did a bunch of acquisitions; it was a nice trading vehicle. All of that changed with the introduction of Apple’s (Nasdaq: AAPL) Siri on the iPhone 4s."
"The ability to take speech technology from basic recognition to natural language processing to a service that can achieve an “outcome” when you do a search is far more valuable than most people expected. Much as it has in the past, Apple built on existing technologies and delivered a breakthrough that people suddenly realized they wanted. In the case of Apple, it is Siri, a voice-activated personal assistant service that Nuance helps to power."
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