NICE Tops Q1 Earnings and Revenue Estimates; Target Price $295

NICE, the worldwide leading provider of software solutions, reported better-than-expected earnings and revenue in the first quarter, largely driven by a record surge in cloud revenue amid the ongoing COVID-19 pandemic.

The company which provides enterprise software solutions worldwide said its earnings per share rose about 15% year-on-year to $1.54, beating the Wall Street consensus estimates of $1.49 per share. The technology company lifted its fiscal year 2021 EPS forecasts in the range of $6.19 and $6.39 per share, higher than the previous guidance of $6.12 to $6.32 per share.

NICE said its first-quarter 2021 total revenues increased nearly 11% to $455.0 million, beating the market expectations of $450.0 million, up from $410.40 million registered in the same period a year ago. Full-year 2021 Non-GAAP total revenues are expected to be in a range of $1,800 million to $1,820 million, up from the previous guidance range of $1,790 million to $1,810 million.

NICE shares rose about 2% to $227.32 in pre-market trading on Friday.

Analyst Comments

“NICE outperformed our estimates in Q1 due to stronger than expected product revenue, while Cloud held to expectations for 30%+ growth. The outlook remains positive as cloud momentum holds, FY estimates come up, though remain conservative, keeping us constructive on the name,” noted Sanjit Singh, equity analyst at Morgan Stanley.

“Since acquiring InContact in November 2016, NICE has emerged as one of the leading players in the fast-growing Contact Center as a Service (CCaaS) market which has helped the company sustain 28% CAGR in its cloud business since 2017 including 31% YoY in 2021. With the cloud now set to represent the majority of the business, we are ‘Overweight’ shares as we believe that a substantial growth opportunity is still in front of the company translating to at least 20%+ cloud growth thru 2022 and that NICE’s cloud business is substantially undervalued relative to its CCaaS peers such as FIVN and RNG.”

NICE Stock Price Forecast

Seven analysts who offered stock ratings for NICE in the last three months forecast the average price in 12 months of $295.71 with a high forecast of $338.00 and a low forecast of $266.00.

The average price target represents a 30.18% increase from the last price of $227.16. Of those seven analysts, six rated “Buy”, one rated “Hold” while none rated “Sell”, according to Tipranks.

Morgan Stanley gave the base target price to $338 with a high of $586 under a bull scenario and $183 under the worst-case scenario. The firm gave an “Overweight” rating on the technology company’s stock.

Several other analysts have also updated their stock outlook. NICE had its price objective lowered by analysts at Citigroup to $296 from $312. The firm presently has a “buy” rating on the technology company’s stock. Oppenheimer restated an “outperform” rating and set a $290 price objective.

Moreover, Pritchard Capital boosted their price objective to $312 from $292 and gave the stock a “buy” rating. Wedbush upped their price target to $285 from $275 and gave the company an “outperform” rating.

“Narrow-moat NICE reported strong first-quarter results that support our thesis that NICE is well poised for robust future growth, reflected by a rapidly expanding customer base, solid user metrics, and growth in CCaaS module adoption on NICE’s platform,” noted Nupur Balain, equity analyst at Morningstar.

“We are raising our fair value estimate to $252 from $242. Shares jumped 2% after open due to stronger-than-expected first-quarter performance and improved second-quarter and full-year outlooks. Shares are currently borderline undervalued, and we see a potential buying opportunity for investor.”

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