Market Overview

Oracle's Earnings: 'Tug Of War Between Old And New Continues'

Oracle's Earnings: 'Tug Of War Between Old And New Continues'
Related ORCL
Tech Sector Earnings: Starting The Year Strong?
The Market In 5 Minutes
Hollencrest Securities Llc Buys SPDR S&P 5……, SPDR Select Sector Fund - Health Care, ... (GuruFocus)

Oracle Corporation (NYSE: ORCL) delivered a “general miss across the board” in FQ1, with currency headwinds being partly to blame, UBS’s Brent Thill said in a report. He maintained a Buy rating on the company, with a price target of $44.

Oracle reported headline revenue of $8.6 billion, short of the Street’s $8.7 billion expectation. OPM came in at 39.5 percent, below the Street’s estimate of 40.2 percent. At $0.55, EPS also missed expectations of $0.58.

Related Link: The Bar Is Set Low For Oracle's Q1 Results

“Results appear to have had an uncontemplated 100bps FX headwind, and higher than modelled tax rate which explains some of the optical miss vs. consensus,” analyst Thill wrote.

Cloud To The Rescue

The FQ1 results indicated that Cloud’s progress was “clear, encouraging, and largely incremental,” Thill mentioned. He pointed out, however, that the margin profile was inferior to Oracle’s on premise business, added, “…we wonder if the real compression on ORCL's profitability is yet to come, especially if the higher margin infrastructure franchise has yet to even begin its Cloud pivot.”

“Though we caution that navigating this transitional territory is unlikely to be swift or smooth, ORCL has emerged from far more precarious circumstances (early 90s), valuation is undemanding on both an absolute and relative basis, and the balance sheet/capital allocation strong enough to provide downside support to shares,” the analyst added.

Do you have ideas for articles/interviews you'd like to see more of on Benzinga? Please email with your best article ideas. One person will be randomly selected to win a $20 Amazon gift card!

Latest Ratings for ORCL

Mar 2017JMP SecuritiesUpgradesMarket UnderperformMarket Perform
Mar 2017JP MorganUpgradesNeutralOverweight
Jan 2017Wells FargoInitiates Coverage OnOutperform

View More Analyst Ratings for ORCL
View the Latest Analyst Ratings

Posted-In: Analyst Color Earnings Long Ideas News Reiteration Analyst Ratings Tech Trading Ideas Best of Benzinga


Related Articles (ORCL)

View Comments and Join the Discussion!