Morningstar | NICE Updated Forecasts and Estimates from 20 Aug 2018
Nice reported its second quarter of fiscal 2018, with both revenue and earnings on par with our expectations, and we are maintaining both our fair value estimate of $108 per share and narrow moat rating. Nice’s cloud revenue grew 27% year over year, continuing to encompass a growing portion of the firm’s total revenue. Longer term, the business is still on pace to produce $500 million in recurring cloud revenue by the end of fiscal 2018, led by the firm’s CXOne platform. We see Nice as a transition story. As the firm moves from on-premises product revenue to recurring cloud revenue, we expect a steady uplift in operating margins. We model a nearly 7.5% revenue CAGR over the next five years, and model operating margins doubling, from 14.5% in fiscal 2018 to above 30% by 2027. However, with shares trading near our fair value, robust growth and margin expansion assumptions have been priced in to this firm, in our opinion, and we would advise investors to await a wider margin of safety.In terms of CXOne, our thesis is that customers will benefit from combining workforce engagement management and contact center infrastructure solutions. WEM products allow a firm to forecast call center volumes and improve workforce efficiency, while CCI tools manage the call routing. Longer term, we need to see greater penetration into the enterprise client market to get comfortable with more robust growth assumptions.
On the financial crime and compliance side, Nice signed multiple deals with large payment vendors and institutions. Some of these tools revolved around automation, with Nice launching Nice Employees Virtual Attendant. We imagine Nice’s robotic process automation products will drive new business. According to Gartner, Nice’s RPA tools are used in attended cases, in tandem with an employee’s desktop activities. We think they present a strong value proposition for firms looking to automate back-office functions.
Morningstar, Inc. is a leading provider of independent investment research in North America, Europe, Australia, and Asia. The company offer an extensive line of products and services for individual investors, financial advisors, asset managers, and retirement plan providers and sponsors.
Morningstar provides data on approximately 530,000 investment offerings, including stocks, mutual funds, and similar vehicles, along with real-time global market data on more than 18 million equities, indexes, futures, options, commodities, and precious metals, in addition to foreign exchange and Treasury markets. Morningstar also offers investment management services through its investment advisory subsidiaries and had approximately $185 billion in assets under advisement and management as of June 30, 2016.
We have operations in 27 countries.
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.