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Nuance Communications poised for ‘meaningful growth,’ says ROBO Global

Nuance is collaborating with another ROBO Global index member, Nvidia, to enable radiologists with the power of artificial intelligence algorithms

A doctor sitting in his office
Nuance delivers AI technology which helps cars read drivers’ minds, virtual assistants predict users’ needs, and physicians use speech rather than a keyboard

Analysts at ROBO Global said Nuance Communications Inc (NASDAQ:NUAN), which provides voice recognition and speech technology solutions, is poised for “meaningful growth” as it doubles down on health care.

ROBO Global created the ROBO Global Robotics & Automation Index, the world’s first benchmark index to track companies that focus on robotics, automation and artificial intelligence.

While Burlington, Massachusetts-based Nuance delivers artificial technology and applications that help cars read drivers’ minds, and virtual assistants predict users’ needs, it is doubling down on the promise of AI in healthcare.

READ: ROBO Global says surgical robots will lower health care costs

It seems the new focus is paying off. Nuance announced posted fiscal first-quarter earnings last week that beat Wall Street expectations. For the quarter ended December 2018, it posted earnings of $0.24 per share on revenue of $493.7 million. The consensus earnings estimate was $0.17 per share on revenue of $490 million.

“While healthcare was the biggest growth driver — including its Dragon Medical cloud solutions — the company also reported strong performance in both automotive and enterprise,” wrote ROBO Global senior research analyst Lisa Chai in a report.

Laser focused on health care

In 2017, Nuance expanded its portfolio by launching the Dragon Medical Virtual Assistant. Powered by AI, the tool understands conversational dialogue and automates clinical workflows.

Chai hailed new CEO Mark Benjamin’s move to streamline what had been a dizzying menu of products and solutions, “trimming five divisions down to two through spinoffs and divestitures, and honing in on the healthcare division — the crown jewel of the business.”

Nuance is also collaborating with another ROBO Global index member, Nvidia, to enable radiologists with the power of AI algorithms that are capable of scanning large quantities of medical images to match patient symptoms with the most appropriate treatments.

“Of Nuance’s $1 billion healthcare business, 50% of that revenue is coming from its document capture business,” wrote Chai.

“With the estimated Total Addressable Market (TAM) for Cloud solutions in the US sitting at about $550 million, as the market leader (Nuance currently has less than 50% of TAM, with the nearest competitor far behind), the company is looking at a significant opportunity to capture the remaining 50% of the market,” she added.

Chai added that Nuance appears to be “poised for meaningful growth over the next few years” as the company places greater emphasis on higher-margin recurring health care revenues.

The ROBO Global Robotics & Automation Index ETF (NYSEARCA:ROBO) was up nearly 1.4% to $37.92.

Contact Uttara Choudhury at [email protected]

Follow her on Twitter@UttaraProactive 

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Price: $39.59

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