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NEW YORK (AP) -- Shares of Nuance Communications Inc. fell Wednesday morning after the maker of speech recognition and digital imaging software said late Tuesday it will offer 9.6 million shares of common stock, and its largest shareholder will sell 4.8 million shares. The stock dropped $1.80, or 8.5 percent, to close at $19.31 Wednesday. The stock has ranged from $10.96 to $22.55 over the past year. Friedman, Billings, Ramsey analyst Daniel H. Ives said that Warburg Pincus' decision to sell nearly 5 million Nuance shares could be seen as a "negative headline" by some, but is more than likely a short-term cash move as the private equity firm is only selling 15 percent of its Nuance holdings. "We believe this liquidity event for Warburg was a means to recoup a good portion of its original investment ($5-$8 range) in Nuance, and we would not expect additional liquidity events to take place in the near term, given Warburg's long-term support and fundamental value of the company," Ives said in a client note. Ives said Warburg Pincus is Nuance's "Rock of Gibraltar," helping it to execute successfully on its aggressive growth plan. Burlington, Mass.-based Nuance will use proceeds from the offering to reduce debt and build up its acquisition fund, Ives said. He kept his "Outperform" rating and $24 price target. Wedbush Morgan Securities analyst Scott Sutherland said the stock offering was "not completely unexpected" and that it should slightly reduce per-share earnings. He kept his "Hold" rating and $21 price target. Citigroup Inc. and Goldman Sachs & Co. are acting as the joint underwriters for the offering.
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