D.A. Davidson Previews Oracle Q2 Earnings

D.A. Davidson on Tuesday issued an earnings preview for Oracle Corporation ORCL and anticipated “no fireworks” according to analyst Jack Andrews.

Oracle will report fiscal Q2 2015 earnings Wednesday after the market close. The average analyst estimate is for revenue at $9.52 billion with EPS of $0.68.

Andrews did reduce his revenue forecasts based on currency impacts and expected “revenue to grow 2.6 percent year-over-year (YoY) to $9,523 million, previously $9,679 million. The company guided for 0-4 percent growth YoY, or $9,283-$9,654 million in revenue.”

Andrews forecasted “non-GAAP EPS of $0.68, previously $0.69, which compares with $0.69 in FY2Q14 and is in line with the Street mean of $0.68. Company guidance is $0.66-$0.70."

For FY2015, the firm forecasted "$3.05 in non-GAAP EPS while the Street consensus is at $3.04" and noted "that ORCL’s financial results have either missed or come in at the low end of management’s guidance range in 6 of the last 8 quarters.”

“The company has recently been emphasizing its strength in the Cloud, and began dividing its Cloud Subscriptions segment into Cloud SaaS & PaaS and Cloud IaaS in FY4Q14. For FY2Q15, we model Cloud SaaS & PaaS revenue to grow 43.0 percent YoY to $370 million and Cloud IaaS to grow 43.0 percent to $139 million,” according to the preview.

The analyst note concluded that “in the near term, we believe the potential for continued choppy execution around the transition to the cloud and negative currency impacts are more widely understood. From a longer term perspective, we believe the probability of the extreme bear case on ORCL being realized (i.e. a secular decliner) should decline as a result of the numerous cloud product introductions at OpenWorld.”

The firm reiterated a Buy rating on the stock and a $47 price target.

Oracle recently traded at $40.88, down 0.56 percent.