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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NICE To Hit Record High of $334 on Robust Growth Opportunity in Cloud; $589 in Best Case

NICE’s shares could hit a fresh record high of $334, surging more than 30% from the last price, according to Morgan Stanley analysts, who said a substantial growth opportunity is still in front of the company, translating to at least 20% cloud growth through 2023.

Last month, NICE Systems reported revenue of $410 million in the third quarter, up 6.1% from the same period last year. Revenue from cloud activities rose 33.9% to $202 million while sales of products and services dipped 32% and 5.2% respectively. The software provider reported diluted EPS came in at $1.41 versus $1.30 last year, 8% growth year-over-year.

“A market-leading cloud contact center business looks poised to sustain 20%+ growth as large enterprises accelerate the shift to cloud. Against this backdrop, NICE looks undervalued when compared to FIVN & RNG using a SoTP analysis, creating an attractive opportunity at current levels. Upgrade to Overweight,” said Sanjit Singh, equity analyst at Morgan Stanley.

“With respect to NICE’s cloud opportunity, we note that: 1) just 19% of agent seats are deployed in the cloud today suggesting that majority of the market opportunity still lies ahead, 2) the current pandemic has heightened the need for flexibility and agility which we believe is causing the large enterprise market to accelerate plans to transition their operations to the cloud, and 3) NICE is well-positioned to take a significant share of seats in the larger enterprise market given its market leadership position in CCaaS with over 500K agents on CXOne and with more than 85% of Fortune 100 and 25K customers overall.”

NICE’s shares surged closed 2.4% higher at $256.08 on Wednesday; the stock is up about 50% so far this year.

Morgan Stanley gave a target price of $589 under a bull-case scenario and $180 under the worst-case scenario. Other equity analysts also recently updated their stock outlook. Jefferies lifted their target price to $285 from $265 and gave the stock a “buy” rating. Oppenheimer lifted their target price to $250 from $230 and gave the stock an “outperform” rating.

In addition, JP Morgan upgraded shares from an “underweight” rating to a “neutral” rating and lifted their target price to $261 from $210. Rosenblatt Securities lifted their target price to $290 from $265 and gave the stock a “buy” rating.

Eleven equity analysts forecast the average price in 12 months at $280.73 with a high forecast of $334.00 and a low forecast of $246.00. The average price target represents a 9.63% increase from the last price of $256.08. From those 11 analysts, eight rated “Buy”, three rated “Hold” and none “Sell”, according to Tipranks.

“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 thru first three quarters of 2020,” said Sanjit Singh, equity analyst at Morgan Stanley.

“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 2023 and that NICE’s cloud business is substantially undervalued relative to its CCaaS peers such as FIVN and RNG,” Singh added.