Initiation of Research Coverage: Vocera Communications, Inc.

Monday, May 7, 2012

William Blair & Company initiated research coverage of Vocera Communications, Inc. (VCRA $21.92), the leading provider of hands-free communication solutions to the healthcare industry, with an Outperform rating and Aggressive Growth company profile.

Analyst Ryan Daniels estimated the company would generate revenue of $99.2 million in 2012 and $123.0 million in 2013.

“Vocera participates in a large and important market,” Daniels said, “with significant opportunity for both greenfield growth (in the United States and abroad) and further expansion within its existing client base. This sizable growth opportunity, combined with a dire need for better communication solutions within acute-care hospitals, should make Vocera one of the top growth opportunities in our coverage universe over the next five years. The company also has an exceptionally strong reputation among its client base; the nurses, administrators, and chief information officers with whom we spoke consistently raved about the company’s product and service quality. To our knowledge, no competitor offers solutions anywhere near what Vocera brings to market. Put simply, the combination of the company’s proprietary device and rules-based communication software appears unrivaled; our channel checks with existing and potential customers also suggest a lack of any formidable competitors.”

Daniels continued, “We also believe that the company offers strong financial characteristics, highlighted by strong organic sales growth (we target mid-20% organic sales growth over the coming years), strong gross margins (in the low- to mid-60% range), a diversified revenue stream, and a pristine balance sheet (with no debt and more than $80 million in cash and equivalents, in our estimation). Shares of Vocera have performed well since the company’s late-March initial public offering, and although the current valuation is not inexpensive, we believe the stock can maintain these valuation levels and appreciate in line with the company’s strong growth over the coming years.”

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