Nuance (NUAN) Spikes on Report It Has Held Talks With Apple

Shares of Nuance Communications Inc. (NUAN) are trading sharply higher Monday. The ticker jumped 10 percent to a new 52-wkh of $22.93 in morning trade on the Nasdaq, the highest intraday PPS since January 1996. The U.S. provider of voice-recognition software has been in talks with Apple Inc. (AAPL) in recent months for a possible partnership or acquisition, TechCrunch’s MG Siegler reported May 6, citing several unnamed sources.

Siegler notes that Apple, which acquired startup app developer Siri last year, needs Nuance’s technology to power Siri’s “personal assistant” functions that respond to voice commands and is available for free on Apple’s iPhone and iPod touch. Siegler opines Nuance might be a major part in the next version of Apple’s iOS 5, with numerous patents on voice technology. Siegler also notes in his piece that Mike Cohen, an original co-founder of Nuance who worked there for many years, is also the guy who created the voice-recognition technology for Google (GOOG).

FBR Capital analyst Daniel Ives today reacted to the speculation in a research note, stating that although Apple stands out as the most likely buyer of Nuance in an acquisition scenario, the latest talk more likely consists of an expanded licensing agreement.

Shares of Burlington, Massachusetts-based Nuance today are up $1.92, or 9.57%, at $22.01. Volume has exploded with nearly 9.5 million shares already trading hands compared to a 3-month daily average volume of 2.3 million shares. The day’s range so far for shares of Nuance Communications, which closed at $20.09 in the previous trading session and opened today at $20.81, has been between $20.71 and $22.93 per share.

Nuance has a market value of $6.54 billion. The stock currently trades at a 5.17x on a price to sales basis. The equity has a forward P/E of 14.72 and a P/E to Growth ratio of 1.20. The median Wall Street price target on the equity is $22.50 with a high target of $25.00.

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