Barclays Previews Oracle's Q2 Results, Says To 'Focus On Guidance'

Barclays recently issued a company note on Oracle Corporation ORCL ahead of the company's FYQ2 results on December 16. Barclays said to focus on the company's guidance regarding their earnings announcement. The firm rates Oracle as Overweight with a $48 price target.

Analyst Raimo Lenschow wrote, "Our revenue and EPS estimates are essentially in line with consensus. Investors will remain focused on cloud growth expectations for FY16...since a second-half acceleration in cloud is key."

Barclays believes Oracle could have limited upside due to a mismatch between billings and revenue. Furthermore, analysts expect license growth to be weak with better cloud performance not able to offset the declines in growth. However, analysts do see Oracle as a cheap investment due to a free cash flow multiple of 10.7x vs a peer median free cash flow multiple of 13.4x. Oracle could also be ready to benefit from reductions in capital expenditures going forward.

Lenschow explained, "We view Oracle as attractive relative to large cap peers due to its robust capital return program and continued strong free cash flow generation"

Shares of Oracle recently traded at $37.24, down 2.46 percent.