What to Watch When Oracle Releases Earnings

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Oracle Corp. (NYSE: ORCL) is set to report its fiscal first-quarter financial results after the markets close on Thursday. The analysts’ consensus forecast calls for $0.81 in earnings per share (EPS) and $9.29 billion in revenue. In the same period of last year, the tech giant said it had $0.71 in EPS and $9.2 billion in revenue.

Back in the fiscal fourth quarter, Oracle said that its total quarterly revenues increased by 1%, and by 4% in constant currency, compared to the same period a year earlier. Cloud services and license support revenues totaled $6.8 billion, while cloud license and on-premise license revenues were $2.5 billion. Total cloud services and license support plus cloud license and on-premise license revenues were $9.3 billion, up 3% in U.S. dollars and 6% in constant currency.

Analysts came out in response. At that time, Merrill Lynch reiterated a Neutral rating for the stock but raised its price objective to $60 from $57. The brokerage firm detailed in its report:

Autonomous DB [database] encouraging, but still waiting for SaaS [Software as a service] … we would have liked to see better performance in cloud services and license support, which continued to decelerate to 3% year over year in constant currency, implying sustained flat/deceleration in cloud SaaS/PaaS/IaaS and/or maintenance. Moreover, total we believe revs would need to accelerate to mid-high single digits for the stock to rerate – 5-6% organic software rev growth will require SaaS/PaaS/IaaS growth of 35-40% (from SaaS at 15-20%; PaaS/IaaS at low 20s today), which will be challenging.

Excluding Wednesday’s move, Oracle had outperformed the broad markets, with the stock up about 3% year to date. In the past 52 weeks, the stock was up roughly 19%.

A few other analysts weighed in on Oracle ahead of the report:

  • Cowen has a Buy rating with a $65 price target.
  • William Blair has a Market Perform rating.
  • Raymond James has an Outperform rating and a $61 target.
  • Wedbush’s Neutral rating comes with a $55 price target.
  • Wells Fargo has an Outperform rating and a $65 target price.
  • Barclays has an Equal Weight rating with a $59 price target.
  • Jefferies has a Buy rating with a $66 price target.
  • BMO Capital Markets rates it as Market Perform with a $59 target.

Shares of Oracle traded up nearly 1% on Wednesday to $55.90, in a 52-week range of $42.40 to $60.50. The consensus price target is $56.62.

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