RBC Remains Bullish On Oracle Ahead Of Wednesday's Q2 Results

Oracle Corporation ORCL is expected to report fiscal second-quarter 2016 results on December 16. Last quarter, the company posted up 2.08 percent. The company had posted average negative earnings of 1.53 percent over the past four quarters. F2Q2016 may just be the period that the software giant delivers on the cloud.

RBC Remains Bullish

RBC Capital remains bullish on Oracle, viewing F2Q2016 and guidance as an important juncture for the company. The firm stated the critical importance that Oracle reiterates targets, having provided FY2016 revenue growth, cloud bookings and gross margin targets last quarter.

Related Link: Canaccord Says If Oracle Shares Get Into The $40 Handle, They Will Downgrade Shares

Jefferies Rating And Price Target

Sentiment for the company remains negative given its competitive pressures and indications that the company is finding traction in its transition would be well received

The application software provider was given a Buy rating with a price target of $50.00 by Jefferies on Monday.

"We expect continued Cloud traction to be a key topic for F2Q, but it's unclear if deal volume will be enough to meet modest cc guidance. FX headwinds will be 0.7 percent greater than when guidance was given, having a -$60 million impact on rev and -$0.01 on EPS. While F2Q is unclear, we believe large ULAs continue to progress and that 12c R2 represents an important multi-year product cycle likely starting near the beginning of CY16," the firm said.

Jefferies also made commentary that Oracle's management spent some time at the Analyst Day explaining some of their thinking behind the license + maintenance model transition to cloud. The firm disclosed its cloud progress and it has been somewhat confusing but still continue to view disclosures as incomplete but improving.

"Recall that we had incorrectly anticipated that F1Q Cloud (SaaS & PaaS) revenue could have been better than expected given the strong bookings of F4Q. In summary, we thought the Cloud new ACV (Annual Contract Value) booked in F4Q of about $425 million would increase revenue sequentially by about a quarter of this, or $106 million.

“What we didn't account for was: promotional activity by Oracle that delayed the start of revenue recognition for SaaS and PaaS subscription sales [...] and while PaaS is sometime sold as subscription, it is also sometimes sold in accordance with a 'metered' contract, where the revenue is recognized as the customer consumes the technology, which could delay or more gradually grow revenue recognition as customers ease into consumption immediately after purchasing PaaS," the firm reported in Monday's analyst note.