Nice Earnings: Stock Dips on Cloud Growth Worries; Shares Undervalued

Narrow-moat Nice reported second-quarter revenue and EPS figures that were generally in line, and guidance for the third quarter was similarly within expectations. Nevertheless, the shares closed down 8% on the day. We surmise the share price reaction is due to slightly lower-than-expected growth in cloud revenue, which may further decline somewhat in the second half of the year. We’ve trimmed our cloud growth expectations slightly for the next few years, which reduces our fair value estimate by around 5% to $265 from $280. Furthermore, we continue to think the shares are undervalued.