Oracle Analyst Roundup After Q2 Earnings

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Oracle Corporation ORCL beat Q2 earnings expectations Wednesday and the company’s shares surged over 8 percent Thursday, recently trading at $44.57.

Analysts commented on the company after it posted earnings. Below are highlights along with current ratings and price targets.

Deutsche Bank - Hold, $44 price target

“Oracle (ORCL) posted results at the high end of their guidance and above the Street consensus, highlighted by total c/c revenue growth of 7 percent (above the 2-6 percent guidance range and the highest in 3+ years, since 4QF11) and non- GAAP EPS of $0.69 (high end of the $0.66-$0.70 guidance range). Three revenue segments stood out, including 1) a recovery in NA database growth to 10 percent+, 2) an acceleration in new cloud bookings to 140 percent from 54 percent and 3) a pickup in c/c maintenance revenue growth to 9 percent in from 6-7 percent in prior quarters.”

D.A. Davidson - Buy, $50 price target

“Our FY2015 revenue estimate moves to $39.687 billion in revenue (previously $40.006 billion) while our non-GAAP EPS estimate declines to $2.95 (previously $3.05), solely due to currency. Given Oracle’s continued success in the cloud, we are decreasing the probability of the bear case in our probability-weighted, scenario-based discounted cash flow analysis. Our $50 price target (previously $47) equates to a P/E multiple of 16.3 our calendar 2015 EPS estimate.”

Morgan Stanley - Overweight, $50 price target

“After a string of shaky quarterly results, a solid Q2 print with both revenues and EPS ahead of consensus expectations (despite rising FX headwinds), should bolster investor confidence about the durability of the foundation Oracle's new cloud businesses are being built on. In particular, we would point the 9 percent constant currency (cc) growth in the software maintenance business — which we estimate drives >80 percent of operating income — and operating margin of 45.7 percent, 80 bps ahead of consensus and flat YoY despite a 100 bps impact from the recent Micros acquisition.”

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Credit Suisse - Outperform, $47.50 price target

“We continue to expect greater potential for revenue upside to consensus revenue estimates in late FY2015 as compared to FQ2, as we believe that Oracle stands to benefit from several drivers late this fiscal year and into FY2016: (1) the potential for further improvements in sales force productivity, (2) adoption of the In-Memory option of Oracle Database 12c, (3) increasing customer adoption of Oracle Fusion Applications, and (4) the massive market opportunity for Engineered Systems.”

FBR - Outperform, $48 price target

“Importantly, Oracle provided February guidance that we would characterize as "good enough" in light of major currency headwinds (management guided for over a 4 percent currency headwind in F3Q) and essentially in line with the Street's revenue expectations after adjusting for currency. While it has been a very bumpy road for Oracle over the past year, we believe November results are a step in the right direction and a contrast to a disappointing past few quarters. In terms of the November quarter, we believe the company's product (cloud, Exadata) and sales force expansion strategies are starting to pay dividends, with Oracle 12c positioned as a product catalyst, which should put some much needed fuel in the company's growth engine for FY15/FY16, in our view.”

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Posted In: Analyst ColorLong IdeasPrice TargetAnalyst RatingsTrading IdeasCredit SuisseD.A. DavidsonDeutsche BankFBRMorgan Stanley
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