Tigress Financial Partners downgraded Oracle Corporation (NYSE: ORCL) from Buy to Neutral in a report issued Wednesday.
Analyst Philip Van Deusen noted that "Oracle reported Q1 results at the end of September that missed analyst expectations both on the top and bottom line while delivering an uninspiring outlook."
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"On a more positive note ORCL’s cloud business is accelerating; bookings grew 54 percent Y/Y and they added over 500 new customers. However, Oracle’s cloud business is too small to make a meaningful contribution to top-line growth at this stage and we believe massive share repurchases have been a primary driver of y/y EPS growth. We await more convincing evidence that revenue growth will return," according to Van Deusen.
"NOPAT margins have been expanding over the past 4 years from a low of 26.4 percent in 2010 to 31.16 percent in 2014. Much of that is due to a decreasing effective tax rate which is hovering near historic lows of just over 20 percent, we believe Oracle’s low tax rate is unsustainable and will progressively increase."
Oracle Corporation recently traded at $38.26, down 0.23 percent.
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