NICE - NICE: Don't Let Management Transition Distract From Cloud And AI Growth Story

2024-07-18 01:52:34 ET

Summary

• NICE Ltd. is a leading Call Center as a Service (CCaaS) provider based in Israel with most revenue coming from the US.
• Shares have sold off by 40% since the CEO announced his retirement, but I think that this is an overreaction.
• The company is primed for accelerated growth and margin expansion as more of its customers transition to the cloud.
• The chief risk is increased competition from Amazon, Genesys, and Microsoft.
• I estimate that shares are worth $260, 45% above today's price.

NICE Ltd. Adr. ( NICE ) is one of the leading call center as a service (CCaaS) providers. The company is based in Israel, but most of their revenue comes from clients in the United States. It came onto my radar as a potential investment last fall when shares fell to around $170. Since then, shares climbed to $260 before falling back to my purchase price. I’m writing, therefore, to reevaluate the investment. I think that NICE is still a BUY. I’m initiating coverage with a 12-month price target of $260. My thesis is that the short-term uncertainty over the CEO transition has distracted from the company’s strong prospects, and that when the transition team and its strategic plan are announced, shares will rerate higher....

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