By Carly Forster
Oracle Corporation (NYSE:ORCL) is a Redwood City, California based multinational computer technology company that specializes in developing and marketing computer hardware systems and venture software products. On Thursday, June 19 the software company posted their fiscal fourth quarter report and their results were less than impressive.
Oracle Corporation (NYSE:ORCL) reported a 4% drop in net earnings in the fiscal fourth quarter and as a result, the stock fell 5.5% in after-hours trading. However, Oracle CEO Larry Ellison sees their poor results as a good thing. He explained, “Oracle is focused like a laser on one goal over the next few years: becoming the No. 1 company in cloud computing in the two most profitable segments: Software-as-a-Service (SaaS) and Platform-as-a-Service (PaaS).” In fact, Ellison pointed out that the company sold numerous cloud computing contracts that haven’t shown up in revenue right away, which is a reason for their poor results.
During their Q4 earnings results, Oracle reported $0.92 earnings per share, missing analysts’ consensus estimate of $0.95 by $0.03. During the same quarter last year, the tech company posted $0.87 earnings per share. Oracle had profit of $11.33 billion for the quarter, compared to analysts’ consensus estimate of $11.48 billion. The corporation’s quarterly proceeds were up 3.3% on a year-over-year basis. On average, analysts’ predict that Oracle will post $2.19 earnings per share for the current fiscal quarter.
Shares of Oracle opened at $40.26 on Friday, June 19. The tech company has a 1-year high of $43.19 and a 1-year low of $29.86. The stock’s daily moving average is $40.44 and has a 50-day moving average of $41.76. The market cap for Oracle is $182.01 billion and its P/E ratio is 17.07.
On June 20, BMO Capital analyst Joel Fishbein reiterated an Outperform rating for Oracle Corporation (NYSE:ORCL) with a $45 price target. He noted, “Management remains bullish on cloud transition progress and bookings and new customer metrics remains very good. Fourth-quarter softness appears to be the result of thousands cuts–some deal slippage on mixed sales execution, some potential pausing in front of the 12c launch, some weakness in APAC and headwinds related to currency devaluation in South America, some hardware deal push-outs, some incremental headwinds to license as mix to subscription accelerates–but overall the story is unchanged, in our view.” Fishbein has a +16.5% average return on all stocks and a 70% success rate in making recommendations. He has a +7.0% average return on Oracle.
Cannacord Genuity analyst Richard Davis also reiterated a BUY for the stock on June 20 with a $48 price target. He reasoned, “Numbers wise, Oracle posted a 3% upside to operating cash flow. Inasmuch as Oracle does not pay a tolling fee for its database to itself, Oracle will have more pricing cushion with which to compete…Perhaps more importantly, the breakout of cloud will make it financially less disruptive for Oracle Corporation (NYSE:ORCL) to accelerate the pace of tuck- in cloud acquisitions.” Davis has a +6.7% average return on all stocks and a 58% success rate in making recommendations. He has a +2.8% average return on Oracle.
However, not all analysts agree that now is the right time to BUY.
On June 20, Credit Agricole analyst Ed Maguire reiterated an Underperform rating for Oracle Corporation (NYSE:ORCL) with a $43 price target. He explained, “We think Oracle is making progress on technological fronts, but competition, secular headwinds facing maturing parts of the portfolio and the organizational evolution of the sales model will take time as FY14 cloud sales represent just 4% of total.” Maguire has a +0.5% average return on all stocks and a 55% success rate in making recommendations. He has a -9.4% average return on Oracle.
Oracle (ORCL) currently has a top analyst consensus of MODERATE BUY.
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Carly Forster writes about stock market news. She can be reached at [email protected]