An Inflection Point In Oracle Corporation's Database Business Could Be Imminent

"We believe the imminent release of the 12c R2 ORCL database could add 8–9 percent of growth to annual revenue once fully realized, or ~2–3 percent if all new business is PaaS. The cumulative PaaS magnitude would grow faster, outstripping the equivalent license plus maintenance contribution within 6 years," analyst John DiFucci wrote in a note.

DiFucci noted Oracle is on the cusp of a major multi-year product cycle associated with the imminent release of the R2 version of the 12c database. 12c R2 was announced at Oracle OpenWorld in October 2015 and is expected to be released at some point before or perhaps during Oracle OpenWorld in September.

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"As existing customers migrate to this new version, we expect that many will purchase the in-memory and multi-tenancy options to improve performance (both) and economics (multi-tenancy)," DiFucci noted.

In addition, the analyst cut his EPS estimates for fiscal 2017 and 2018 by about $0.05 to $2.76 and $2.96, respectively, on higher interest expenses from the recent issue of $14 billion in notes in late June.

At time of writing, shares of Oracle were up 0.17 percent to $41.33. DiFucci has a price target of $51.

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