On Friday the share price of Israeli technology company NICE Systems Ltd. (Nasdaq: NICE; TASE:NICE) fell 7.9% and was accordingly down 7.64% on the Tel Aviv Stock Exchange (TASE) today. The sharp fall came after NICE’s rival Five9 published its financial results and cut its 2024 revenue guidance, although it raised its non-GAAP profit forecast.
Five9 said cutting revenue guidance was due to trends on new orders as well as economic uncertainty. Investors may feel that NICE could also be hurt by these trends. NICE, which provides solutions for customer relationship management and risk management, is expected to publish its second quarter reports this Thursday, August 15.
However, the direction of NICE’s shares price has been negative for some time and does not depend on this or that financial report. The company now has a market cap of $10.6 billion, down by about 50% from the peak it reached in mid-November 2021. On the TASE, the share price has returned to the price at which it was traded over four years ago.
So, the Israeli company with the highest market cap on Wall Street in 2022 is currently not even in the top five largest Israeli companies today. NICE is ranked sixth, below cybersecurity company Check Point, Teva Pharmaceuticals NYSE: TEVA; TASE: TEVA), auto-tech company Mobileye (Nasdaq: MBLY), work operating system company monday.com (Nasdaq: MNDY) and cybersecurity company CyberArk (Nasdaq: CYBR). On the TASE where NICE was the most valuable company, it is today ranked fourth after Teva, Bank Hapoalim and Bank Leumi, which have all overtaken it in recent months.
Veteran CEO stepping down with no replacement found
A major factor weighing on NICE’s stock in recent months is uncertainty over the company’s leadership with veteran CEO Barak Eilam announcing three months ago that he is stepping down at the end of the year (although he will continue working for the company and assisting whoever replaces him during the first half of 2025) . Meanwhile, NICE has not yet announced who will be replacing him.
Eilam, who has spent his entire career with NICE, rising through the ranks, was appointed CEO a decade ago and has sharpened NICE’s business focus, selling non-core activities, acquiring companies and moving to cloud activities, which has become the fastest growing in NICE's operations. During Eilam’s decade as CEO revenue has grown 2.5 times and non-GAAP profit is 3.5 times higher, while the number of employees has doubled. Investors appreciated NICE under Eilam’s leadership and the share price rose 360%, from the time he was appointed CEO until he announced he was stepping down, which marked a turning point in the stock’s fortunes.
Other factors weighing on NICE’s share price recently include the sale of shares in the company by huge investor Blackrock, which reported last month that as of the end of June it was no longer a party at interest in NICE and now holds a 4.3% stake, down from 5.1% in March. Also earlier this year, Microsoft reported the launch of its major customer services product, which saw both NICE and Five9’s share price fall.
In efforts to end the negative momentum and inject market confidence into the stock, NICE reported two months ago on the acceleration of its $300 million share buyback program and the launch of another $500 million buyback program. Eilam said at the time that the move reflects NICE’s commitment to increase shareholder value and confidence in the strength of the company's business.
According to "The Wall Street Journal" data, the analysts believe in NICE shares - the average recommendation is "Buy" and the average price target price is $266, 68.8% higher than the current Nasdaq price.
NICE publishes its second quarter financial report on Thursday., The company has forecast $657-667 million revenue and earnings per share of $2.53-2.63. For full-year 2024, NICE predicts $2.715-2.735 billion revenue, up 14.6% from last year in the mid-range of the forecast and earnings per share of $10.53-10.73, up 20.9% from 2023, in the mid-range of the forecast.
Published by Globes, Israel business news - en.globes.co.il - on August 11, 2024.
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