Nomura Maintains Buy Ahead Of Oracle's Q4 Earnings

Nomura maintained a Buy rating and $44 price target on Oracle Corporation ORCL heading into the company's Q4 earning report on June 16.

"The stock is up 1.4% since F3Q'16 earnings, underperforming the S&P 500, up 5.1%. While metrics for cloud revenue growth have been solid, investors remain concerned by what the potential cost will be to the legacy business, as well as the potential impact to margins during the transition," said analsyt Frederick Grieb. "Additionally, recent allegations by a former employee regarding accounting improprieties have also caused investor concern, although Oracle has denied wrong-doing."

The note continued, "We maintain a Buy rating given the low valuation and our belief that there is an opportunity for multiple expansion should the business show increasing traction in the cloud. FY16E EPS at $2.62; FY17E EPS at $2.85."

Shares closed Thursday at $39.05, down 0.6 percent on the day.