TipRanks
AI is growing: 2 ‘strong buy’ shares that benefit
The COVID pandemic may be subsiding, but it has left its mark on many aspects of our lives. From mask orders to travel restrictions, we are irritated by some of the changes – but in the business world, the use of artificial intelligence (AI) systems has expanded dramatically in the past year. This was probably inevitable – but AI has brought benefits to the pandemic for companies that could use it, and expansion has accelerated. AI has found its place in a wide range of applications, both on the front and back end of companies. It is prevalent in software and data systems management, as well as in communications, where AI systems filter emails and drive robochats. And that was not ignored by Wall Street. Analysts say that many attractive investments can be found in this space. With that in mind, we opened the TipRanks database and removed two stocks that could benefit from AI technology. It is important to note that both have accumulated very optimistic calls from analysts to receive “strong buy” consensus ratings. Nuance Communications (NUAN) We will start with Nuance, a company in the niche of communication software. This Massachusetts-based company offers solutions for business customers in the healthcare and customer service sectors, with products that enhance voice recognition, phone call routing systems, automated phone directories, medical transcription and optical character recognition. It is a complete range of cloud communication software with AI, applied in real time. Nuance’s flagship product, Dragon Ambient eXperience (DAX), is marketed to the healthcare industry, where it uses AI to automate the load of paperwork in doctors’ offices and hospitals. This streamlines operations, allowing doctors to have more time and resources to spend with patients and provides greater satisfaction for healthcare professionals and users. The applications of Nuance’s product lines and solutions for today’s environment are clear: when the pandemic trapped so many people at home, companies still had to keep their systems focused on the customer, and software automation based on AI technology , made it possible with less staff. Since the pandemic started last winter, the company has seen its shares grow tremendously, rising 205% in the past 12 months, far surpassing the stock market in general. The most recent quarterly report, for the first fiscal quarter, showed quarterly revenues above the forecast of $ 81.4 million. EPS showed a net loss, as expected, but at 27 cents the loss was a sequential improvement of 28% over the third quarter. The company’s balance sheet is strong, with zero debt, $ 256 million in cash and a credit line of up to $ 50 million. The company’s most recent quarterly report, for the first fiscal quarter, outperformed both top and bottom forecasts. Profits exceeded expectations by 11%, reaching 20 cents per share, while earnings of $ 345.8 million were a modest 2% above estimates. As a result, operating cash flow grew 22% year on year, to $ 54.6 million in the quarter. Among the bulls is 5-star analyst Daniel Ives of Wedbush, who classifies NUAN’s shares as Outperform (ie, Buy), and its $ 65 target price implies a potential upswing of ~ 44%. (To view Ives’ history, click here) “We believe that Nuance in general remains focused on building a global cloud health and AI driven business with growing ARR and a sustainable revenue / earnings stream moving forward with larger businesses in the field as more hospital-wide deployments are shifting to the cloud and gaining momentum based on our checks, “said Ives. The analyst added: “From an assessment / SOTP perspective, we believe that, over time, the DAX business alone could be worth between $ 3 billion to $ 4 billion in NUAN shares, as this next AI platform generation represents a potential paradigm-shifting paradigm for hospitals / health clinics / specialists in the coming years. Nuance has received 6 recent reviews and they are all about to buy. The shares are trading at $ 45.20, and the average target price of $ 59.67 suggests an increase of 32% in one year. (See NUAN stock analysis at TipRanks) Dynatrace, Inc. (DT) The second AI action we will be looking at, Dynatrace, is another cloud software company – but Dynatrace products are designed to feed business data. The company’s AI platform features intelligent automation for network management and cloud monitoring. The DT platform allows cloud automation, business analysis, digital experience, application security, applications and microservices and infrastructure monitoring. It is sold as a one-stop shop for network and system managers looking for an intelligent software agent. Dynatrace’s shares have shown consistent growth over the long term. The stock rose a hefty 133% in the last 12 months, and revenues have also been growing in that period. In the most recent report, for the third quarter of fiscal year 2021, the company showed $ 182.9 million in top-tier revenue, beating the forecast by ~ 6% and growing 27% year-over-year. Earnings per share were 6 cents, stable compared to the second quarter and much better than the breakeven point reported for the previous year’s quarter. Three main indicators stand out in the quarterly report, and both for the right reasons. Subscription revenue grew 33% year-over-year, to reach $ 170.3 million, and annual recurring revenue (ARR) – which is an important indicator of future performance – grew 35% year-over-year and reached US $ 722 million. At the same time, license revenue fell more than 93%, to just $ 300,000. Together, these results point to a strong shift towards recurring cloud customers – a common trend in the software space. Needham 5-star analyst Jack Andrews has been following Dynatrace closely and believes that DT’s AI products can replace existing tools as customers expand into additional modules. “Embedded AIOps and automation create an attractive value proposition … Compared to competitors in the market, DT’s AI Engine is built into its central platform and can be leveraged across the portfolio to provide answers from data. In addition, its One Agent technology automatically discovers high fidelity data from applications and therefore can map billions of dependencies in complex environments, “said Andrews. The analyst summed it up:” In our opinion, DT is well positioned to serve as a the only source of truth that can help users draw a line between written code and business results (ie BizDevSecOps). “Andrews cited Dynatrace as the best choice and, according to this optimistic assessment, the analyst values the stock as Buy, with a price of $ 66 Investors can pocket a ~ 28% gain if the analyst’s thesis materializes. ( To see Andrews’s track record, click here) Once again, we’re looking at a stock whose strong performance has inspired unanimity from Wall Street analysts. DT’s shares have 13 buy ratings, for a strong buy consensus rating. shares sell for $ 51.76 and their average price target of $ 59.69 suggests an increase of ~ 15% from that level. (See DT’s stock analysis at TipRanks) To find good ideas for stock trading of AI in traction assessments, visit TipRanks’ Best Stocks to Buy, a newly launched tool that brings together all the capital insights from TipRanks. Disclaimer: The opinions expressed in this article are exclusively those of the analysts presented. s er used for informational purposes only. It is very important to do your own analysis before making any investment.