7 Things Wall Street Is Saying About Oracle Before Earnings

Oracle Corporation ORCL reports fiscal Q3 earnings Tuesday following the market close.

The Street expected EPS of $0.68 on revenue of $9.47 billion. For Q4, consensus EPS was $0.94 on revenue of $11.44 billion.

For the full 2015 fiscal year, consensus was for EPS of $2.95 on revenue of $39.09 billion.

Fiscal 2016 consensus was for EPS of $3.17 on revenue of $40.40 billion.

'Another Strong Performance'

Cantor Fitzgerald analyst Brian J. White expected Oracle would meet or slightly miss the firm's Q3 revenue estimate of $9.52 billion due to an FX drag as well as the firm's EPS projection of $0.68. White anticipated "another strong performance from Oracle's cloud business" and believed "the 12c upgrade cycle provides a healthy tailwind for" 2016.

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The firm maintained a Buy rating and $48 price target.

FX Headwinds

D.A. Davidson analyst Jack Andrews expected revenue of $9.569 billion and EPS of $0.68. The analyst noted that "SAP will likely need several years to rewrite the basic functionality of its software, and even longer to achieve functional parity on the vertical/micro level (i.e. including all the customizations) that SAP customers experience today. This timeframe may not match certain existing SAP customers' desire to move to robust SaaS solutions more rapidly."

Andrews also expected an FX headwind, but maintained a Buy rating and $50 price target.

4 Drivers That Could Help

Credit Suisse analyst Philip Winslow lowered FY2015 revenue and EPS estimates from $39.511 billion to $39.197 billion and from $2.94 to $2.90 due to FX. Winslow believed Oracle would "benefit from several drivers during late FY2015 and into FY2016: (1) the potential for further improvements in salesforce 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."

Credit Suisse maintained an Outperform rating and $47.50 price target.

'Better Sales Traction'

Jefferies analyst John DiFucci "detected better sales traction in the current period (in both the US and Europe) driven by both more aggressive competitive practices in some instances and what appears to be better field execution in others." The firm maintained a Hold rating and $41 price target.

'Modestly Favorable'

Deutsche Bank analyst Karl Keirstead was "modestly favorable into the print given the relatively low valuation (ORCL trades at 13.4x 2015e non-GAAP EPS and 11x FCF)" and what was believed to be "an already-cautious Street sentiment backdrop."

The firm maintained a Hold rating and $44 price target with 2015 EPS expected at $2.56.

Licensing Revenue Stability

MKM Partners analyst Kevin Buttigieg was in line with consensus and thought "investors would like to see stability in ORCL's license revenues with growth in cloud revenues, which would be an indication that its software business is not in decline but rather benefiting from the ascension of cloud computing.

"While we think the latter will be better than projected thanks to acquisition (and largely cosmetic), the former may be below consensus," he wrote.

Margins Are De-Risked

Citi analyst Walter H. Pritchard expected EPS of $0.67 and believed "with underperformance in [the] stock and neutral Q3 set-up, the risk-reward is positive into the report. Beyond this, we like the set-up better at SAP in large cap tech as we believe growth in both core business as well as organic cloud are higher and margins are de-risked."

Citi maintained a Neutral rating and $41 price target.

Ahead of its earnings release, Oracle Corporation closed at $43.41 Monday, up 2.43 percent.