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Deals Could Continue to Drive Markets

David Becker
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Nuance Communications'(NASDAQ:NUAN) shareholders have been in for a rough ride in 2013, and continue to face headwinds in 2014. Multiple setbacks including profit misses and analyst downgrades have driven shares of Nuance Communications down to the $15 range. At the end of April 2013 Nuance Communications was trading at $23.38. Its stock oscillated from $13.00-23.38 over the last 52-weeks and mostly consolidated in an increasing stock market.

On November 25, 2013 Nuance Communications issued a profit warning with respect to full-year earnings as the switch to a subscription-based business model is impacting short-term revenues and earnings. Shares of Nuance Communications quoted at $15.99 on November 25, 2013 but dropped sharply lower to $13.00 the next day, A decline in market capitalisation of approximately 19% in just a matter two days.

Carl Icahn an insider in the company purchased nearly 15 million shares in December which was a catalyst for the stock to move back to the 15 dollar range. After releasing better than expected earnings in January the stock popped again but this was short lived. Nuance Communications still trades relatively cheaply at just twelve times forward earnings which seems low compared to the high valuations usually seen for industry-leading tech companies. This make the stock a potential take out candidate, and given Tuesday’s news about forest which is another stock that is heavily owned by Icahn, Nuance could be a solid bet.

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