Not All Cloud Cloud Companies Are Equal: 4 Analysts Cautious On Oracle After Q4, Here's Why

Zinger Key Points
  • Bank of America's Brad Sills noted cloud growth of 22% in the quarter was below expectations, along with several brands seeing declines.
  • Piper Sandler Brent Bracelin saw cloud growth smaller than rivals and free cash flow margins depressed going forward.

Shares of Oracle Corporation ORCL are trading higher Tuesday after the company reported fourth-quarter earnings results after market close Monday. Here are what analysts had to say about the company’s latest report and what’s ahead.

The Oracle Analysts: Bank of America analyst Brad Sills had a Neutral rating on Oracle and a price target of $90.

BMO Capital analyst Keith Bachman had a Market Perform rating and lowered the price target from $92 to $86.

JMP Securities analyst Patrick Walravens had a Market Perform rating and no price target.

Piper Sandler Brent Bracelin had an Underweight rating and a price target of $70.

Related Link: PreMarketPrep Stock Of The Day: Oracle Gives Investors Some Good News In A Bearish Time 

The Analyst Takeaways: Bank of America's Sills was impressed with the licensing business line for Oracle but noted the company’s cloud segment lagged.

“Q4 represents another quarter with upside from license, demonstrating still healthy demand for legacy on premise database and application licenses,” Sills said.

The analyst noted cloud growth of 22% in the quarter was below expectations and came with several brands seeing declines.

BMO Capital's Bachman saw the growth of the company’s license segment as unsustainable and also highlighted cloud revenue being below guidance.

“We continue to believe that Oracle is well-positioned for the current investment climate that focuses more on FCF valuation,” Bachman said.

A focus on cost-cutting by the company could be more valuable than revenue growth, the analyst noted.

JMP Securities' Walravens increased guidance for Oracle with the Cerner acquisition adding to the fiscal year 2023. The analyst thought shares are fairly valued but points to several positives.

“Oracle has a couple really interesting things going on in its business, including a ramping cloud business that achieved an $11.6B run rate in F4Q, growing 19% organically,” Waravens said.

Oracle has been working on a transition to cloud for several years, Piper Sandler's Bracelin noted.

“We argue that Oracle Cloud operating metrics could underwhelm investors over the coming year,” Barcelin said.

The analyst saw cloud growth smaller than rivals and free cash flow margins depressed going forward.

Bracelin preferred companies such as Salesforce Inc CRM and Veeva Systems Inc VEEV instead of Oracle.

ORCL Price Action: Oracle shares closed Tuesday up 10.41% to $70.72.

Photo: Courtesy Oracle


Posted In: Bank of AmericaBMO CapitalBrad SillsBrent Bracelincloud stocksJMP SecuritiesKeith BachmanPatrick WalravensPiper Sandlersoftware stocksEarningsNewsPrice TargetReiterationAnalyst RatingsTechTrading Ideas

Ad Disclosure: The rate information is obtained by Bankrate from the listed institutions. Bankrate cannot guaranty the accuracy or availability of any rates shown above. Institutions may have different rates on their own websites than those posted on The listings that appear on this page are from companies from which this website receives compensation, which may impact how, where, and in what order products appear. This table does not include all companies or all available products.

All rates are subject to change without notice and may vary depending on location. These quotes are from banks, thrifts, and credit unions, some of whom have paid for a link to their own Web site where you can find additional information. Those with a paid link are our Advertisers. Those without a paid link are listings we obtain to improve the consumer shopping experience and are not Advertisers. To receive the rate from an Advertiser, please identify yourself as a Bankrate customer. Bank and thrift deposits are insured by the Federal Deposit Insurance Corp. Credit union deposits are insured by the National Credit Union Administration.

Consumer Satisfaction: Bankrate attempts to verify the accuracy and availability of its Advertisers' terms through its quality assurance process and requires Advertisers to agree to our Terms and Conditions and to adhere to our Quality Control Program. If you believe that you have received an inaccurate quote or are otherwise not satisfied with the services provided to you by the institution you choose, please click here.

Rate collection and criteria: Click here for more information on rate collection and criteria.