Oracle 'Lacks Catalysts To Drive Re-Rate,' Evercore ISI Says In Downgrade

One analyst moved to the sidelines on Oracle Corp. ORCL, as the risk-reward is more balanced and the company demonstrates little change in disclosures and cloud strategy after a summer rally.

The Analyst

Evercore ISI's Kirk Materne on Oct. 1 downgraded Oracle from Outperform to In Line, with a $53 price target.

The Thesis

Shares are now more fairly valued and the debate between bulls and bears will continue into the near term.

“We acknowledge that ORCL could grind higher from here," Materne said in a note, "as the current valuation already reflects a high degree of skepticism related to its growth strategy and we believe that there are some steps Oracle could take as it relates to its public cloud strategy or providing more visibility into its SaaS growth that could help reignite investor interest in the story.”

The likeliness of a more collaborative strategy is low, however, as the company is unlikely to alter its decision on cloud disclosures.

“As such, we advise taking a wait and see approach from here as we expect Oracle will remain a ‘debate’ stock and there will continue to be fairly wide swings in sentiment, which will potentially create more attractive entry points on a risk/reward basis.”

Price Action

Oracle shares were down marginally Wednesday at $50.06.

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