Nuance Communications (NASDAQ:NUAN) Looks Solid for 2011, May Start Slow

While the trends appear to project a good year for Nuance Communications (NASDAQ:NUAN), they could start off slow for seasonal reasons.

UBS says, "PT to $25 as roll-fwd 1 qtr and up P/E to 16x. NUAN is poised to see sequentially improving trend this FY as: (1) speech adoption accelerates in handsets, cars, and among mobile health care workers, (2) smartphones grow rapidly and gain advanced speech functionality thanks to faster processors and 3G/4G speeds, (3) automotive end-markets recover and design-win momentum translates to shipments/royalties, (4) Healthcare segment benefits from HITECH Act and new pdts, (5) Enterprise rebounds from negative comps, and (6) SaaS model matures.

"While we believe trends were solid, FQ1s can start off seasonally slow. We expect NUAN to post in-line to slight upside to our ests: rev UBSe $320M, Street $319M, guide $312-325M; EPS USBe $0.31, St. $0.31, guide $0.28-0.32. Date: early Feb."

UBS reiterates a "Buy" rating on Nuance Communications, which closed Thursday at $20.51, up $0.03, or 0.15 percent. UBS raised their price target on Nuance from $20 to $25.