UPDATE: Wedbush Downgrades Nuance Communications on Incremental Risk Heading into FY14

In a report published Tuesday, Wedbush analyst Shyam Patil downgraded the rating on Nuance Communications (NASDAQ: NUAN) from Outperform to Neutral, and lowered the price target from $22.00 to $15.00.

In the report, Wedbush noted, “Nuance reported F4Q slightly ahead of estimates, but issued FY14 EPS guidance meaningfully below expectations. While the business model transition issues have been ongoing for some time: (1) shift toward cloud-based services in mobile and enterprise, (2) move toward EMR-based Dragon Medical sales in healthcare and away from cloud-based eScription, it appears the trends have accelerated, creating incremental visibility concerns and risk heading into FY14. At the same time, Nuance is ramping investments in several areas, putting additional pressure on margins. With the continued uncertainty associated with the business model shifts, limited forward visibility into revenue and margins, and lack of near-term catalysts, we are lowering our rating to NEUTRAL.”

Nuance Communications closed on Monday at $15.99.