Here's How Analysts Are Reacting To Oracle's Earnings Report

Oracle Corporation ORCL shares slumped 6 percent and analysts trimmed their views after the software company said a business model shift and a stronger dollar hurt fiscal fourth-quarter results.

"It would be easy to throw in the towel after a head-scratching quarter like this one," FBR's Daniel H. Ives said. "But we see some positive signs."

Ives maintained an Outperform rating, citing Oracle's 28 percent growth in cloud services, although they still represent a small part of the company's revenue and are unprofitable.

The company's total fourth quarter revenue fell 5 percent to $10.7 billion, but said the figure would have been up 3 percent without the strengthening of the U.S. dollar.

Earnings of $0.78 a share fell 9 percent short of expectations.

Related Link: Oracle Misses Q4 Estimates, Shares Drop

Oracle's current strategy "isn't producing results" Ive said, adding that he expects the company will now turn to making acquisitions to fuel its growth in the cloud and "big data" sectors.

"It's never easy to defend a revenue and earnings miss," said RBC's Ross MacMillan, who said Oracle's transition to cloud-based subscription revenue ultimately helps Oracle.

"The major issue is the lack of cloud profitability," MacMillan said, suggesting that margins will widen with increasing scale.

MacMillan cut his target 4 percent to $50.

But Wedbush's Steven Koenig called the company's unexpectedly weak guidance "shocking" and said Oracle's transition to the cloud "is now affecting earnings in a big way."

The Wall Street consensus for fiscal 2016 results "hadn't adjusted sufficiently for foreign exchange," added Koenig, who maintained a Neutral rating and trimmed his target slightly to $40.

Wunderlich's Robert Breza maintained a Hold rating and $47 target, suggesting that the expansion of Oracle's cloud business over the upcoming 12 months will continue to dampen total revenue growth and margins.

Wall Street analysts' views of Oracle appear to sharply divided, but average out to an Overweight rating and $46.06 target, according to FactSet.

On Thursday, Pacific Crest's Brendan Barnicle and Credit Suisse's Philip Winslow maintained Overweight and Outperform ratings, respectively.