What 14 Top Oracle Analysts Are Saying After Earnings

Loading...
Loading...

Oracle Corporation ORCL reported Q3 earnings Wednesday. Revenues came in at $9.3 billion, below expectations of $9.46 billion. Non-GAAP EPS was $0.68, in line with analyst estimates.

 

The stock surged higher following the news and traded at $44.32 Wednesday morning, up 3.38 percent.

 

The Street commented on the results with many analysts bullish on the stock despite concerns over FX. Below are highlights along with current ratings and price targets.


BMO Capital Markets - Outperform, $49 price target

 

"Oracle's 3Q results and guidance showed improvements in underlying business trends absent of a continued FX headwind. Total revenue growth of +6 percent CC was in line with the midpoint of guidance and EPS growth accelerated +9 percent y/y CC. Deferred revenue was +6% CC and Cloud bookings and ARR targets move higher and the dividend increased 25 percent. Looking forward our estimates comedown modestly due to FX and we continue to see EPS acceleration into next year as compares improve."

 

RBC Capital Markets - Sector Perform, $48 price target

 

"Better underlying growth ex FX supports our view of improving fundamentals in database and cloud apps. But a more severe FX impact ahead and slightly softer underlying guidance results in estimates moving slightly lower. We see upside to the shares but keep our $48 price target and rating based on a consistent approach to the multiple."

 

 

Pacific Crest Securities - Outperform, $48 price target

 

"All of the revenue shortfall came from new license sales. CFFO was $2.63 billion, below consensus of $3.1 billion. Management blamed half of the shortfall on FX, taxes and hardware restocking. Because of the currency headwinds, we are lowering estimates, but we see F2016 EPS of $3.13."

 

Jefferies - Hold, $41 price target

 

"ORCL appears to be moving to where the puck is going, as Cloud sales gained significant traction, though still represent only about 5 percent of total revenue. F3Q results were solid relative to modest expectations, as all revenue line items grew excluding currency effects, with maintenance and support growing nicely, though software license and hardware product both declined on an organic, cc basis."

 

Loading...
Loading...

Barclays - Overweight, $48 price target

 

"Another core component of our positive outlook on Oracle from a medium to long term perspective is the tailwind that we think the company is poised to benefit from around the broader adoption of 12c. Larry Ellison had positive commentary on the early adoption of 12c, pointing out that the in-memory and multi-tenancy options are contributing to increased customer enthusiasm. Although the adoption cycle takes time (customers typically do extensive testing), management pointed to a more rapid adoption and development phase than experienced in prior database cycles."

 

MKM Partners - Neutral, $44 price target

"We've been looking for stable license revs and growing Cloud revs to act as a catalyst for ORCL shares, and though they largely delivered on those objectives in F3Q15, other cloud transition challenges that were previously not present at ORCL (but have been for peers) now emerged. Specifically, op. margins are under some pressure as is total software growth, reflected in lowered guidance, and is possibly attributed to the lower-margin cloud revs growing faster than expected and taking share from license to a greater degree than previously realized. In the past, while ORCL's license revs had been under pressure, margins and guidance were not. This new cloud wrinkle could hamper EPS growth ex-FX and P/E multiple expansion."


FBR & Co. - Outperform, $48 price target

 

"Overall, despite Oracle's solid F3Q cloud results, good enough F4Q guidance, and raised dividend, the company still has challenges ahead, in our opinion, as it continues to make the painful cloud transition (e.g., move to subscription-based model). To this point, we believe Oracle will be aggressive on the M&A front over the coming year as it looks to further bulk up its product portfolio (e.g., cloud, big data, and cybersecurity) and capitalize on healthy secular trends for cloud/engineered systems spend."

 

Morgan Stanley - Overweight, $50 price target

 

"Given the volatility in FX rates, management only provided guidance in constant currency, which could create some confusion when sell-side and investors try to assess guidance versus consensus and update their forward models. However, even in constant currency, we find forward estimates continue to be conservative."

 

Credit Suisse - Outperform, $50 price target

 

"Excluding the FX headwinds, constant currency results were strong on both the top and bottom line. While we expect FX headwinds to continue to impact Oracle's reported results, the constant currency and operational results reinforce our positive thesis on the continued turnaround in Oracle's database business and the company's growing traction with its SaaS and PaaS offerings."

 

Cantor Fitzgerald - Buy, $48 price target

 

Oracle exited 3Q:FY15 with $43.78 billion in cash and $32.26 billion in debt for a debt-to-capital ratio of 40 percent. Oracle returned $2.5 billion in cash to shareholders in 3Q:FY15 with $2 billion in share repurchases and $530 million in dividends. During 3Q:FY15, Oracle generated $2.3 billion in operating cash flow and $1.9 billion in free cash flow. Over the past 12 months, Oracle had paid out over 75 percent of free cash flow to investors through the share purchase program and dividend payments. The company also announced plans to increase quarterly dividend payout by 25 percent to $0.15 from $0.12."

 

Stifel - Buy, $49 price target

 

"The great news with accelerating cloud growth is a more predictable revenue model and overall higher economics over the medium-to-long term. The ‘downside' of a faster-than-expected cloud ramp is that margins will likely remain somewhat depressed. We have stated for some time that we think the street's FY16 operating margin is too high (we are now at 46 percent; street was at 47.9 percent going into the call) and expect the street to take margins down."

 

D.A. Davidson - Buy, $51 price target

 

"We believe Oracle's current and anticipated future product set is attacking several significant market opportunities within the broad enterprise applications software arena and our estimated market forecast exceeds $550 billion by 2024."

 

Deutsche Bank - Hold, $44 price target

 

"In c/c, YTD FY15 total organic revs growth is ~1 percent, YTD non-GAAP EPS growth is 6 percent while TTM FCF is down ~2 percent. Given this growth profile, it's hard to argue that ORCL shares should garner much more than the current 2015 non-GAAP EPS multiple of 15x (in-line with other mature tech peers). Our PT is based on 15x our CY16 numbers, in-line with other mature tech peers. Downside risks include a sluggish database business and OM/FCF pressure due to the cloud transition, while upside risks include a strong cloud ARR metrics."

 

Bank of America - Buy, $48 price target

 

"Our thesis of cloud at the tip of the iceberg is playing out, significantly exceeding our expectation of 2x booked but not billed business. New cloud annual recurring revenue bookings of ~$200mn+ grew 130 percent y/y in 3Q with expectations of $300mn+ in 4Q (up from $250mn) and well over $1bn in CY15E. This hyper-growth has yet to translate to cloud revenue acceleration as implementation and usage timing can impact timing of recognition. Cloud is at a tipping point as initial expectations of bookings growth of 50+ percent is in actuality 100+ percent. The q/q growth in Cloud DR was up $79m vs no growth prior quarters, a testament to cloud inflection."

Loading...
Loading...
date
ticker
name
Price Target
Upside/Downside
Recommendation
Firm
Posted In: Analyst ColorPrice TargetAnalyst RatingsBank of AmericaBarclaysBMO Capital MarketsCantor FitzgeraldCredit SuisseD.A. DavidsonDeutsche BankFBR & Co.JefferiesMKM PartnersMorgan StanleyPacific Crest SecuritiesRBC Capital MarketsStifel
Benzinga simplifies the market for smarter investing

Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.

Join Now: Free!

Loading...