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Bull of the Day: NICE Ltd. (NICE)

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NICE Ltd. (NICE - Free Report) is an Israeli company that provides enterprise software solutions that enable organizations to enhance customer experience, drive business performance, ensure compliance, and fight financial crime. Cyber security is a big deal and in the news lately, especially after the big yahoo hack.The stock is the Bull of the Day after it recently became a Zacks Rank #1 (Strong Buy).

NICE has a market cap of $4 Billion with a Forward PE of 21. The stock sports Zacks Style Scores of “C” in Growth, but “D” Value.  Valuation is the issue for the company and investors are looking for the company growth potential to send the stock higher. The company sits in an industry ranked 68 out of 265 (Top 26%) of the Zacks Industry Rank. And its Sector Rank is in the top 13%, or 2 out of 16.

Earnings and Guidance

NICE reported Q3 earnings on November 10th, with EPS coming in at $0.83 versus the $0.80 expected. Revenue came in lower than expected, with the company reporting $2.37 million versus the $2.40 million expected. However, raised fiscal year 2016 range to $3.53-3.65 verse the expected $3.54. They also raised Q4 to $1.10-1.22 versus the $1.13 and sees revenues significantly higher than expected.

Investors reacted positively, sending the stock close to $70 before it pulled back to the 50-day moving average. After bouncing off that support, it looks like a breakout over $70 will come soon. Shortly after earnings, JP Morgan reiterated its overweight rating and $74 targets.

CEO Barak Eilam has recently commented on the company’s progress:

“We’ve created a strategy that allows NICE to expand the sales of its leading solutions to markets in which we had less presence in the past, as well as to provide additional value to our existing customer base. We have witnessed an increase in demand in the market for a long-term partner that can provide solutions across all the deployment modes to ensure flexibility and continuity as each company evaluates and executes their move to the cloud. NICE has been able to win business through a combination of offering compelling technologies which address our customers’ most critical needs, while positioning them for success down the road, along with outstanding execution both in the product house, as well as in the field.”

Earnings Surprise

The company next reports on February 9th where it will look for its tenth straight EPS beat. There has been a lot of resistance at the $69 level, but with the market sky rocketing higher this level should break, forming a run like the stock saw back in late 2014/early 2015.

Estimate Revisions

The stock is seeing revisions upward across all time frames. The biggest jump is seen for next year, where in the last 60 days we have seen an 8% jump, from $3.23 to $3.49.

In Summary

In hot markets you can find breakout stocks often, but most investors are late to the party. NICE offers a potential to get in before the rip over $70 lands on everyone radar. Futre growth, a strong track record of earnings performance and technical strength are all lining up for a nice 2017 for the stock.

 

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