Wells Fargo analyst Colin Langan has maintained their bullish stance on CRNC stock, giving a Buy rating yesterday.
Colin Langan has given his Buy rating to Cerence’s stock due to a strategic shift in the company’s focus towards generative AI and core functions which is anticipated to strengthen its position in the automotive AI market. Despite lowering revenue targets for the upcoming years, Langan foresees an opportunity for Cerence to leverage its automotive expertise and enhance AI solutions, which are expected to be superior to currently available alternatives like ChatGPT. This strategic pivot is intended to keep Cerence’s offerings competitive as technology evolves.
Additionally, the early termination of a legacy contract with Toyota is set to positively impact financials in the short term, providing clearer visibility into the company’s operational performance. While this has led to a revision in sales and earnings forecasts for subsequent years, with a consequent reduction in the price target from $32 to $25, Langan maintains a positive outlook. The valuation remains attractive with Cerence trading at roughly 12 times adjusted EBITDA, which is below the valuation of its SaaS peers, suggesting that the stock is undervalued and thus warrants an Overweight rating.
Langan covers the Consumer Cyclical sector, focusing on stocks such as Ford Motor, General Motors, and Magna International. According to TipRanks, Langan has an average return of -0.3% and a 54.39% success rate on recommended stocks.
In another report released yesterday, TD Cowen also maintained a Buy rating on the stock with a $23.00 price target.
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Cerence (CRNC) Company Description:
Cerence, Inc. builds automotive cognitive assistance solutions to power natural and intuitive interactions between automobiles, drivers and passengers, and the broader digital world. It also engages in the sale of software licenses and cloud-connected services. The company was founded on February 14, 2019 and is headquartered in Burlington, MA.
Read More on CRNC:
- Cerence (NASDAQ:CRNC) Gains on Strong Q4 Revenue Growth
- Cerence Announces Fourth Quarter and Fiscal Year 2023 Results
- Options Volatility and Implied Earnings Moves Today, November 27, 2023
- Is CRNC a Buy, Before Earnings?
- Cerence to Announce Fiscal Fourth Quarter and Full Year Results on November 27, 2023
