ORCL Has High Cost Saving Potential From Sun Acquisition

Analysts at Morgan Stanley maintain their "overweight" rating on Oracle Corporation (NASDAQ: ORCL). The target price for ORCL has been raised from $26 to $29.

According to Morgan Stanley, the potential of cost savings associated with Oracle’s acquisition of Sun Microsystems (NASDAQ: JAVA) is very high. ORCL would be able to reduce its operating expenses by $1.3-$1.9 billion without any meaningful impact on revenues, the analysts said.

The analysts believe that the performance of Oracle’s core business is improving. ORCL is expected to close the Sun deal and the execution is likely to be better than the market expectations. The company is likely to pursue accretive acquisitions and additional share purchases in the future, the analysts added.