Oracle Did 'Better Than Feared,' But Not Enough For An Upgrade

Deutsche Bank's Karl Keirstead reaffirmed his Hold rating on Oracle Corporation ORCL, as Q4 results were "better than feared."

"Against a backdrop of very low expectations, ORCL delivered in-line total c/c revs growth of zero, EPS of $0.81, at the low end of guidance," Keirstead stated. Revenue growth was 4 percent, ever so slightly better than the analyst estimates of 3 percent. Cloud revenues were up 68 percent, well above the 57–61 percent guidance. Q1 for FY17 has "solid guidance," and the analyst upped his revenue estimate from $37.3 billion to $37.8 billion for Q1FY17.

Related Link: Oracle Results Applauded By Barclays

Oracle's on-premise business is 72 percent of revenue and "is surprisingly stable," Keirstead noted. On–premise software revenue was -2 percent year-on-year. The company gave a +1 percent guidance for Q1FY17 for on-premise revenue and "flattish" for FY17. This stagnation can be attributed to Oracle's big database/middleware business not yet transitioning to the cloud.

The guidance provided by Oracle for FY17 somewhat mitigates the downside risk in the stock, but Keirstead is held on the sidelines by the sluggish database trends.