Nuance Shares Jump on Analyst Comments
Wednesday December 7, 11:49 am ET
Nuance Shares Reach Fresh 52-Week High As Analysts Praise Fourth-Quarter Results
NEW YORK (AP) -- Nuance Communications Inc. shares spiked more than 12 percent Wednesday to a fresh year-high after analysts said the digital imaging software maker is in the midst of a turnaround that will dramatically accelerate growth next year.
The Burlington, Mass.-based company, which recently changed its name from ScanSoft, reported late Tuesday its fourth-quarter loss widened. However, the company breezed past Wall Street projections -- and told investors it expects to see robust performance going forward.
The company posted a fourth-quarter loss of $7.7 million, or 6 cents per share, on revenue of $61.9 million. Excluding items, the company earned $7.4 million, or 6 cents per share, ahead of analysts' consensus view of 4 cents per share.
Analysts hailed the quarterly results as the strongest step yet in the company's rejuvenation, urging investors to snap up shares of the stock. Several projected earnings next year will surpass previous expectations.
"We have concluded that the renaissance in Nuance's results over the past three quarters is for real," said Needham analyst Richard Davis Jr. in a report moving the company's rating to a "Buy" from a "Hold." "We missed the bottom on the stock, but by all indications, it looks like the business will have legs for at least the next couple of years."
Davis, and other analysts, predict revenue and earnings per share growth should accelerate by some 20 percent during the next 12 months. The jump is pinned on Nuance's shift toward the faster growth speech industry and away from its scanning business.
Nuance builds voice recognition systems used by financial services companies and other industries at their call centers. The company reported Tuesday it secured new and expanded agreements with a number of large customers -- including T-Mobile, Verizon and Wal-Mart.
"Nuance had a strong 2005, growing 25 percent organically, making five acquisitions, launching new versions of all products, and rebranding itself Nuance," said Raymond James analyst Mike Latimore in a note to clients. "The company sees strong demand continuing in all speech categories in fiscal 2006." The analyst maintained his "Strong Buy" rating on the company, and $7.50 target price.
Also in demand was Nuance's stock, which surged to a fresh 52-week high of $6.88 in morning trading. Shares rose 58 cents, or 9.5 percent, to $6.70 in midday trading on the Nasdaq. The stock has surged almost 60 percent this year alone. |
