Markets & Finance

Needham Ups Nuance Communications to Buy from Hold

Needham upgraded its investment recommendation on Nuance Communications (NUAN) to buy from hold, explaining that the software company has reported three good quarters in a row after digesting acquisitions.

Analyst Richard Davis noted the revenue growth rate in Nuance's speech recognition software business, which was up about 35% year over year. For the first time, in 2006, the speech side of Nuance's business will be a greater contributor to revenue than its scanning software business. Davis thinks Nuance could see revenue and earnings per share growth of 20% and 25%, respectively for the next couple of years. He also sees 29 cents 2006 earnings per share and has a $7.50 price target on the stock.

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