“Given the strong strategic relationship between Microsoft and Nuance on the healthcare front, a linchpin behind this deal would be Nuance’s next generation DAX initiatives in our opinion,” said Ives. “Based on our recent March checks we believe DAX adoption could be even quicker than we had been anticipating, as the value proposition behind this next generation AI platform appears to be resonating with the healthcare installed base across the board.”
Ives thinks the DAX business on its own makes up between $3 billion to $4 billion of Nunace’s SOTP (sum of the parts) valuation. The analyst thinks that over the coming years, the AI next-gen platform could be a “potential paradigm changer” for hospitals and healthcare clinics.
Since CEO Mark Benjamin took over the reins in 2016, the speech-recognition specialist has undergone an “unprecedented strategic turnaround,” and Ives believes the company “represents a unique asset” on the healthcare front for Microsoft if it does decide to go down this path.
Ives also believes that Nuance’s advanced speech technology can be further integrated into Microsoft’s consumer and enterprise ecosystem. Overall, the 5-star analyst foresees no major regulatory hurdles getting in the way of the deal’s consummation.
The acquisition values Nuance shares at $56 each, and will amount to Microsoft’s second biggest deal ever – only behind the $24 billion the company splashed out on the Linkedin acquisition.
However, given Nuance’s status as a “unique” asset, Ives thinks other “strategic/financial bidders” might enter the fray, possibly upping the deal to one worth over $60 per share. (To watch Ives’ track record, click here)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.