Market Overview

UBS, KeyBanc Preview Oracle's Q4, Eye Forex Impact

Share:
UBS, KeyBanc Preview Oracle's Q4, Eye Forex Impact

Oracle Corporation (NYSE: ORCL) is scheduled to report its fourth-quarter results after the market close Wednesday, June 19.

The print marks the easiest comp of the year for the tech company, but could be impacted by a stronger U.S. dollar, according to UBS.

The Analysts

UBS' Jennifer Swanson Lowe maintained a Neutral rating on Oracle with an unchanged $54 price target.

KeyBanc Capital Markets' Brent Bracelin maintained a Sector Weight rating. 

UBS Sees 'Modest At Best' Growth

Oracle previously guided for its constant currency revenue growth to accelerate in fiscal 2019 versus 2018, Swanson Lowe said in a Friday note.

Constant currency growth year-to-date stands at 2% versus 3% in fiscal 2018, and the acceleration seen this year has been "modest at best," the analyst said. 

Recent moves in the U.S. dollar may be greater than what Oracle previously assumed in its guidance, Swanson Lowe said. The case to be skeptical on Oracle's growth prospects can be made until the company proves otherwise, she said. 

Finally, Oracle's remaining $12-billion share buyback authorization coupled with a dividend yield north of 2% offers a "backstop" to the stock, according to UBS. 

KeyBanc On Cloud, FX Headwinds

Heading into Oracle's print, KeyBanc expects the cloud business and foreign exchange headwinds to impact results, Bracelin said in a Thursday note.

The cloud business faces ongoing "secular pressures" as large enterprises speed up spending in modern cloud stacks, the analyst said. This could continue impacting Oracle's revenue growth, which remains stuck in a negative 3% to positive 5% range over the past seven years, he said. 

Foreign exchange impacted Oracle's third-quarter report by 400 basis points, and the U.S. dollar has continued to strengthen since then, Bracelin said. This could not only impact fiscal fourth-quarter results, but future performance into the next fiscal year, he said. 

Oracle's "aggressive" stock buyback program could result in the company's net debt approaching $12 billion, the analyst said.

On the other hand, the company does generate "healthy" free cash flow of $12 to $14 billion annually, giving the company some flexibility in how it funds buybacks or lowers its debt load, according to KeyBanc. 

Price Action

Oracle shares were trading down by 0.46% at $53.59 at the time of publication Friday. 

Related Links:

Analysts Say Oracle's Outlook Is Uncertain Following Earnings Beat

Oracle Can't Keep Up $10B In Buybacks Per Quarter, Nomura Instinet Says In Double Downgrade

Photo courtesy of Oracle. 

Latest Ratings for ORCL

DateFirmActionFromTo
Oct 2019DowngradesBuyHold
Sep 2019MaintainsMarket Perform
Sep 2019MaintainsEqual-Weight

View More Analyst Ratings for ORCL
View the Latest Analyst Ratings

Posted-In: Brent BracelinAnalyst Color Price Target Previews Reiteration Analyst Ratings Tech Trading Ideas Best of Benzinga

 

Related Articles (ORCL)

View Comments and Join the Discussion!

Latest Ratings

StockFirmActionPT
TOLGoldman SachsInitiates Coverage On42.0
KBHGoldman SachsInitiates Coverage On36.0
YEXTSunTrust Robinson HumphreyMaintains28.0
LHCGSunTrust Robinson HumphreyMaintains160.0
DLRSunTrust Robinson HumphreyMaintains140.0
View the Latest Analytics Ratings
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Trading Daily
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Daily Analyst Rating
A summary of each day’s top rating changes from sell-side analysts on the street.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at vipaccounts@benzinga.com

Iran Denies It Was Responsible For Tanker Attacks; Slams U.S. Accusation As "Baseless"

A Top Technical Analyst's Take On Disney, Netflix