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Oppenheimer analyst Timothy Horan reiterated the Outperform rating on NICE Ltd (NASDAQ:NICE), with a price target of $225, down from $250.
NICE will acquire LiveVox Holdings, Inc. (NASDAQ:LVOX) for $3.74/share in an all-cash deal, implying a firm value of $387 million, or 2.7x annualized 2Q23 revenue.
LVOX has taken significant cost-cutting measures with EBITDA margins +2,000bps year/year in 2Q23, which NICE should be able to further accelerate, the analyst adds.
Horan estimates LVOX to contribute $100 million to cloud revenue in 2024.
NICE's Customer Engagement business is driven by intensifying corporate compliance and risk-management efforts and by corporate efforts to increase efficiency and reduce costs, the analyst notes.
Horan raised 2024 EPS by 1% on LVOX's lower EBITDA margins. LVOX's high-quality product and customer base is a net positive for CXone.
The analyst believes NICE is well positioned, growing EPS above 15% per year.
The company can produce over $700 million per year in free cash flow, which at current short-term interest rates could add $35 million per year to earnings alone, Horan adds.
NICE could get aggressive on stock buybacks at only 17x earnings and $1 billion in cash, Horan notes.
RBC Capital Markets analyst Rishi Jaluria reiterated the Outperform rating on NICE, with a price target of $238.
Jaluria thinks LiveVox's strengths in outbound and footprint in BPOs are additive to the platform, and LiveVox's conversational intelligence assets complement NICE.
The analyst highlights ~25% or ~$35 million of LiveVox's revenue comes from non-voice solutions, which are likely complements to NICE's digital and AI offerings.
However, consensus models LiveVox non-GAAP operating margins of 9% in 2H24, well below NICE's 30% margins, and LiveVox already recently executed a 16% reduction in force in January, the analyst adds.
Price Action: NICE shares are trading lower by 1.46% to $167.49 on the last check Thursday.
