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AudioCodes stock soars to 14-year high

AudioCodes (NASDAQ: AUDC) stock soared to reach a 14-year high of $16.35 on Wednesday. Investors remained positive on the future of the seller of advanced voice networking and media processing solutions. They were satisfied with the recent fourth-quarter results and waiting for the first quarter earnings.

Majority of the analysts recommended a “buy” rating with a price target of $16. They tend to value the company much more than the current scenario and believes AudioCodes will outshine other computer and technology stocks in the next three months on signs of improving analyst sentiment and a positive earnings outlook trend.

AudioCodes headquarters building in Israel
Image Courtesy: AudioCodes

Quarterly scenario

In the recent fourth-quarter, AudioCodes reported a 574% surge in earnings helped by lower income tax provision as well as an increase in the top line. Adjusted earnings jumped by 66% driven by the significant strength in its UC-SIP business, which increased more than 30% year-over-year.

The success in growing UC-SIP business is intertwined with the continued trend of digital transformation and transition towards a digital workplace. Revenues rose by 3% as it continued to lead the Enterprise Voice segment with voice connectivity solutions. Also, the company continued to invest in the recently announced voice.ai business unit, an investment which is already bearing fruit.

Skype for Business continues to hold the number one spot with 44% of businesses. The company expects Skype for Business to be used by 53% of the users by the end of 2020. AudioCodes sees about 21% of businesses using Microsoft Teams up from just 3% in 2016. Looking forward at the end of 2020, it is forecast that Teams will grow from 21% to 41% of users to use Microsoft Teams.

Also read: Microsoft Q2 earnings results

Looking ahead, the company remained confident in its ability to continue to expand its business in 2019 and beyond based on current business momentum. AudioCodes intended to continue its investment in future offerings and focus on the return on investment to its shareholders.

Buyback spree

As of December 31, 2018, AudioCodes had purchased an aggregate of 17.6 million of its ordinary shares since August 2014 for an aggregate consideration of $94.1 million. During the quarter, the company acquired 250,000 of its ordinary shares under its share repurchase program for $2.8 million consideration.

In January 2019, the company got court approval in Israel to buy up to an aggregate of $12 million of additional ordinary shares pursuant to its share repurchase program. This also permitted the company to declare a dividend during the approved validity period. The current court approval will expire on July 1, 2019.

During the fourth quarter, the company declared a semi-annual cash dividend of $0.11 per share and an aggregate amount of about $3.2 million. AudioCodes expects to continue declaring semi-annual dividends in the coming years. The company continues to expect top-line revenue growth and operating margin expansion in 2019. Revenue is expected to be in the range of $190 million to $197 million and adjusted earnings are anticipated to be $0.76 to $0.81 per share for 2019.

Shares of AudioCodes opened higher on Wednesday but changed course to the red territory in the afternoon. The stock has risen over 121% in the past year and over 42% in the past three months.

 

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