Leerink Boosts PT on Nuance Communications (NUAN) to $21 Following Q4 Results, Strong Outlook
Leerink is raising its price target on Outperform-rated Nuance Communications (Nasdaq: NUAN) from $19 to $21 following Q4 results and solid FY16 guidance issued Monday night.
Analyst Steven Wardell noted positives and negatives from the quarter:
Positives -
- The Transformation Program is working, 4Q beat of $0.06 driven by strong cost cutting execution.
- Healthcare is driving the company's 2016G bookings growth of ~4% with important contributions from Clintegrity, Dragon Medical, and Diagnostics. Management expects continued hospital focus on clinical documentation in 2016 to support Clintegrity growth, strengthened by ICD-10 upgrade.
- Revenue model transition in mid-to-late stages as Revenue mix approx. 68% from recurring (up from 63% y/y).
- Strong '15 Automotive bookings looks to be a key driver of revenue growth in '16.
Negatives -
- Operating results still face drag of revenue model transition and erosion of older lines of business.
- Topline growth remains elusive with 1.3% growth in '16G.
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