Speech Recognition Firm Nuance Rises On Upgrade

PHILADELPHIA (AP) —Shares of Nuance Communications Inc. rose Monday after an analyst upgraded the stock due to improving growth prospects for its speech recognition technology in the mobile phone and other markets.

Broadpoint AmTech analyst Brad Whitt raised his recommendation of the company to "Buy" from "Neutral." It is scheduled to report third-quarter earnings after the close of the regular trading session Monday.

"Nuance is the clear market leader for speech recognition technology with several growth drivers that could re-accelerate in fiscal 2010 as the economy improves," he said in a research note.

He expects the company to meet or slightly exceed third-quarter analysts' expectations while maintaining its fiscal 2009 outlook. Analysts are expecting third-quarter revenue of $249.8 million and earnings of 25 cents per share, according to Thomson Reuters.

Whitt expects that better-than-expected performance in mobile enterprise, solid recurring revenue growth and strong margin expansion will offset sluggish growth in license revenue.

He said some of the difficulties in the mobile enterprise division, accounting for half of revenue, faded in the third quarter. Whitt expects further improvements in fiscal 2010.