Nuance (NUAN) Business Transition Complete, Now the Rewards Come - Oppenheimer
Nuance Communications (NASDAQ: NUAN) reported revenues of $513.3M, exceeding the Street's estimate of $507.8M. When adjusting for currency headwinds, revenue would have been up 1% YoY. EPS of $0.41 bested the Street's $0.35 estimate on better volumes and higher operating margins of 30.2% vs. the Street's 28% estimate.
Total net new bookings of $357.4M was up 9% YoY, 12% for adjusted currency. This performance was mainly driven by strong growth in healthcare, automotive, mobile as well as the Imaging and Enterprise divisions. Recurring revenue now represents 68% of total revenue, lending to improved visibility.
NUAN guided F1Q16 rev./EPS of $486-498M/$0.31-0.33 and FY16 rev./EPS to $1.98-$2.03B/1.35-$1.45.
Oppenheimer analyst, Shaul Eyal's key takeaway was that the transformation process toward a more SaaS-related business model is showing positive indications, as could be observed by improved margins and bookings levels". He believes NUAN's fundamentals continue to improve, and EPS accretion is further supported by an ongoing buyback and cost containment measures.Momentum seems to be building for NUAN, he said.
The firm reiterated an Outperform rating and price target of $26.
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Shares of Nuance Communications closed at $17.05 yesterday.