Shares of Nuance Communications (NUAN) dropped significantly after earnings, only to immediately recover most of those losses. Investors were rattled by the weaker-than-expected guidance as the voice recognition specialist transitions to recurring revenue sources. Judging by the quick recovery, it was a classic case of market overreaction.
In the following video, Fool contributor Evan Niu, CFA, and Eric Bleeker, CFA, discuss the pros and cons of Nuance, as well as its valuation relative to rival Google (GOOGL 1.42%) in terms of free cash flow.
