Why Nice Stock Plummeted Today
Key Points
Nice's profit in the first quarter came in far lower than Wall Street expected.
The company's full-year guidance looked solid, but investors weren't happy with its Q2 targets.
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Nice (NASDAQ: NICE) stock got hit hard in Wednesday's trading. The company's share price fell 22.5% in the daily session despite a bullish backdrop for the broader market. The S&P 500 gained 1.4% in the session, and the Nasdaq Composite was up 2%.
Nice published its first quarter results before the market opened this morning, and the business saw a substantial miss on earnings despite posting sales that were above Wall Street's expectations. While shares had rallied heading into earnings, the stock is now down roughly 14% year to date.
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Nice posted a big earnings miss in Q1
Nice recorded non-GAAP (adjusted) earnings per share of $0.77 on sales of $768.6 million in the first quarter. Even though revenue topped the average analyst estimate by roughly $7.7 million, adjusted earnings per share came in $1.75 below the average analyst target. Investors had been banking on stronger demand from artificial intelligence (AI) projects, and the stock saw a big pullback in response to softer-than-expected momentum.
What's next for Nice?
In addition to the company's big earnings miss in Q1, investors also seem to be disappointed with the company's forward guidance. Management is guiding for adjusted revenue between $761 million and $771 million in the current quarter, falling short of the previous average analyst estimate's call for sales of roughly $777.4 million.
With its new guidance, management is calling for year-over-year sales growth of roughly 5.5%. Meanwhile, the company is targeting adjusted earnings per share between $2.60 and $2.70.
Looking further out, full-year sales are projected to come in between $3.17 billion and $3.19 billion. Adjusted earnings per share for the year are expected to be between $10.98 and $11.18.
Even though the company's targets for the full-year period narrowly beat Wall Street's expectations, investors seem to be focusing on softer-than-expected guidance for Q2. On the heels of today's big pullback, Nice could warrant a closer look from tech investors.
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Keith Noonan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Nice. The Motley Fool has a disclosure policy.
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