360-Degree Preview for Oracle Earnings (ORCL, IBM, CSCO, HPQ, SAP)

Oracle Corporation (NASDAQ: ORCL) is set to report earnings after the close of trading Tuesday and investors are likely to be paying close attention to the body language offered up in the conference call for how they treat enterprise spending.  Thomson Reuters has estimates of $0.47 EPS and $8.36 billion.  Estimates for the quarter ahead are $0.57 EPS and $9.38 billion.

In case Larry Ellison wants to offer longer-term guidance, Oracle’s Fiscal May-2012 estimates are $2.40 EPS and $39 billion in revenues.  In short, Oracle trades at about 12-times this year’s expected earnings and the company has a habit of beating estimates on the earnings side.

SAP AG (NYSE: SAP) remains the big bogey that Oracle is taking market share from and we expect to hear about even more market share wins if the past holds true today.  We will also be watching closely how this impacts Hewlett-Packard Co. (NYSE: HPQ) now that it is buying Autonomy and now that it will be more of an enterprise company after ditching the PC business.  This gives another look at International Business Machines Corporation (NYSE: IBM) as well as a check against what John Chamber of Cisco Systems Inc. (NASDAQ: CSCO).  Today is about enterprise spending, no more and no less.

The chart matters here. Last week’s rally took shares back above that 50-day moving average on the chart ($28.73).  The 200-day moving average now sits up at $31.57 and there should be resistance on the chart up around $30.75 based upon the summer support levels before the selling took hold.  Oracle was above $36.00 at the peak in early-May.

Susquehanna raised Oracle to Positive last week, but the big call that drove shares last week was the raise to the Conviction Buy List by Goldman Sachs.  With growth expected to continue, the analysts called the stock too cheap.

Options are showing a large discrepancy with weekly options versus monthly options since expiration was just last Friday and we still have more than a full month until the October expiration date.  At the money puts and calls for October indicate a priced-in move of up to about $1.25 in either direction and the weekly expiration options are still allowing for what appears to be a $1.00 move in either direction.

With shares around $29.05, the 52-week trading range is $24.72 to $36.50.  It is interesting that analysts have an average price target of $36.05, under the 52-week now.

JON C. OGG