Seeking Alpha
Profile| Send Message| ()  

By Kevin Cook

Nuance Communications (NUAN) has consistently been a Zacks No. 4 Rank (Sell) or No. 5 Rank (Strong Sell) since disappointing the Street in February, with its first-quarter (fiscal year 2013) results.

And its 2QFY13 results, unexpectedly reported on April 30, didn't help the cause any. The company was unable to offer any clearer guidance about the state of its turnaround.

And while many investors stepped aside from the muddy December quarter and were rewarded for doing so in the March one (check out my price chart below), one giant among them accumulated a 10% stake.

I am speaking, of course, of Carl Icahn who reported in an SEC filing on April 30, he was the holder of nearly 34 million shares. Clearly, he sees something that the analysts don't as earnings estimates continue to head down.

Can You Hear Me Now?

Nuance is a leading provider of speech recognition technology and voice interface software that enable the information and services of enterprises, telecommunications networks and the Internet to be accessed from any telephone. You find its technology everywhere from corporate call centers to consumer devices.

The company's solutions enable voice transcription and automation within the healthcare, mobile, and desktop verticals. Nuance is also a leading provider of imaging solutions for businesses and consumers. Its technologies, applications and services make the user experience more compelling by transforming the way people interact with information and how they create, share and use documents.

Here's a look at how the analysts are having trouble speaking the same language as either the company, or Icahn...

Is All the Bad News Priced-In?

But Carl isn't completely alone in seeing a silver lining here. One Wall Street house, Wedbush Securities, recently initiated coverage of Nuance with an Outperform rating and a $23 price target.

"While the company clearly has issues to resolve (sales execution, better managing the shift to recurring revenue sources), we view the risk/reward as favorable at current levels."

To join this optimistic view, you have to believe that company (or Carl) can turn things around. Not knowing what or how long that will take, I think we can safely wait to see if those earnings estimates turn around first.

NUANCE COMM INC (NUAN): Free Stock Analysis Report (email registration required)

Source: Bear Of The Day: Nuance Communications