Shares of NICE Systems (NICE) have never missed shareholders’ expectations in each of the various subperiods in the past five years, outperforming the NASDAQ Composite over the past three months.
This upturn will likely continue in the next several months, as the stock possesses strong catalysts for higher share prices. Thus, I am bullish on this stock. (See NICE stock charts on TipRanks)
Headquartered in Ra’anana, Israel, NICE is a global provider of enterprise software solutions that support small, mid, and large businesses to improve their customer service experiences and ensure compliance with policies in the workplace.
Based on cloud and on-premises technologies, these solutions are also designed to prevent fraud and combat corruption in the organization, targeting the safeguard of businesses and citizens.
Q2 Financial Results
In addition to the rapid growth of the business across global markets, the rising adoption of the company’s cloud contact center software, especially by large enterprises, caused total revenue for the second quarter of 2021 to increase by 16% on a year-over-year basis. Total revenue beat analysts’ projections by $9.1 million.
Furthermore, proforma EPS increased by nearly 15% year-over-year, beating the consensus average by $0.06.
The company also reported an increase in the proforma gross margin, which went up 120 basis points to 72.2%, while the operating margin of 28.2% was flat year-over-year.
Recent Business Developments for Future Growth
In September, the company announced several relevant business developments. As a result of strategic partnership agreements signed with KOHO Financial, a Toronto, Canada-based fintech company, and with Tata Consultancy Services Limited, the largest publicly traded IT services provider in India, NICE has increased its presence in financial crime solutions markets globally.
Plus, following its agreement with BCE (BCE), the largest telecommunication services provider in Canada, NICE’s cloud-based software for contact centers will expand its usage in Canada.
Guidance
Looking ahead to full-year 2021, the company projects proforma total revenues between $1.84 billion and $1.86 billion, up approximately 1.93% from the previous guidance range.
Proforma diluted EPS are expected to be between $6.26 and $6.46, reflecting a 1.1% hike from the previous guidance range.
Analysts estimate EPS of $6.27 to $6.45 on total revenue of $1.84 billion to $1.86 billion.
Wall Street’s Take
In the past three months, five Wall Street analysts have issued a 12-month price target for NICE. The average NICE price target is $337.40, implying 21% upside. The analyst rating consensus is a Buy rating, based on five Buys.
Summary
The company participates in, and promotes, the digital transformation that is taking place in the various industrial sectors.
The conclusion of important business agreements with other companies gives NICE more than a chance to increase sales and profits in the future. Consequently, the stock price should continue to rise.
Disclosure: At the time of publication, Alberto Abaterusso did not have a position in any of the securities mentioned in this article.
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