Can NICE's Acquisition Of LiveVox Be Accretive? Analysts Weigh In

Oppenheimer analyst Timothy Horan reiterated the Outperform rating on NICE Ltd NICE, with a price target of $225, down from $250.

NICE will acquire LiveVox Holdings, Inc. LVOX for $3.74/share in an all-cash deal, implying a firm value of $387 million, or 2.7x annualized 2Q23 revenue. 

LVOX has taken significant cost-cutting measures with EBITDA margins +2,000bps year/year in 2Q23, which NICE should be able to further accelerate, the analyst adds.

Horan estimates LVOX to contribute $100 million to cloud revenue in 2024.

NICE's Customer Engagement business is driven by intensifying corporate compliance and risk-management efforts and by corporate efforts to increase efficiency and reduce costs, the analyst notes. 

Horan raised 2024 EPS by 1% on LVOX's lower EBITDA margins. LVOX's high-quality product and customer base is a net positive for CXone.

The analyst believes NICE is well positioned, growing EPS above 15% per year. 

The company can produce over $700 million per year in free cash flow, which at current short-term interest rates could add $35 million per year to earnings alone, Horan adds. 

NICE could get aggressive on stock buybacks at only 17x earnings and $1 billion in cash, Horan notes.

RBC Capital Markets analyst Rishi Jaluria reiterated the Outperform rating on NICE, with a price target of $238.

Jaluria thinks LiveVox's strengths in outbound and footprint in BPOs are additive to the platform, and LiveVox's conversational intelligence assets complement NICE.

The analyst highlights ~25% or ~$35 million of LiveVox's revenue comes from non-voice solutions, which are likely complements to NICE's digital and AI offerings.

However, consensus models LiveVox non-GAAP operating margins of 9% in 2H24, well below NICE's 30% margins, and LiveVox already recently executed a 16% reduction in force in January, the analyst adds.

Price Action: NICE shares are trading lower by 1.46% to $167.49 on the last check Thursday.