For Oracle, The Tide Is Starting To Turn

Oracle Corporation (NYSE: ORCL) is scheduled to report its F4Q16 results on June 16.

Goldman Sachs’ Heather Bellini maintains a Buy rating on the company and reiterated a price target of $48.

What To Expect For 4Q

Taking into account the impact of FX, Bellini now expects the company to report revenue of $10.46 billion, with non-GAAP EPS of $0.82, in line with the consensus and the guidance.

The analyst believes that “F4Q16 will serve as a meaningful indicator on the pace of the transition to the cloud,” and pointed out that Oracle’s guidance of new ARR bookings of $1.5 billion implies new ARR worth $715 million for F4Q16.

“We note that with the transition to the cloud, we do not expect F4Qs to see the same qoq uptick as seen in the past, but do think F4Q16 can grow above the level posted in the year ago period,” Bellini stated.

What Lies In Store For FY17

The analyst expects Oracle to reaffirm FY16 has been the trough for operating income. Bellini also expects the company’s return to earnings growth in FY17 would be well received by investors.

“We also expect FY17 to mark the first year where growth in cloud revenue will outpace the decline in on-premise sales,” Bellini went on to say.

Given the faster-than-anticipated transition to the cloud, the F1Q17 and FY17 EPS estimates have been lowered from $0.59 to $0.58 and from $3.82 to $2.80, respectively.