Oracle (ORCL) reports quarterly earnings after the market close Thursday, with analysts looking for more insight on its transition to cloud computing and its acquisition of NetSuite.
The Wall Street consensus is for earnings per share minus items to fall 5% from the year-earlier quarter to 60 cents, on a 1.7% revenue uptick to $9.14 billion, for its fiscal second quarter ended Nov. 30.
The enterprise software giant has been steadily transitioning more of its business to the cloud and away from selling on-premise, licensed software.
On Nov. 7, Oracle completed its $9.3 billion acquisition of NetSuite, a provider of cloud-based customer relationship management and enterprise resource planning software. Oracle co-founder and Chairman Larry Ellison owned a nearly 40% stake in NetSuite.
But UBS recently said several software vendors have hinted that the U.S. election and Brexit-related uncertainties have extended sales cycles and caused deal slippage.
IBD’S TAKE: Oracle stock is up about 10% this year as it trudges through a flat base with a 42.10 buy point. Oracle moved above its 200-day moving average on Dec. 7, a bullish indicator. But the stock has a week IBD Composite Rating of 39, meaning it has been outperformed by 61% of stocks in the past year.
Adobe Systems (ADBE) will also report earnings after the market close Thursday. Adobe also went through a cloud computing transition that is now paying off. Cowen recently rated Adobe as one of its top ideas for 2017. Adobe and Oracle will be the first of the big tech firms to report financials that include November, the month of Donald Trump’s surprise presidential victory, which has sparked the stock market though not so much the tech sector.
Ronsenblatt Securities analyst Marshall Senk has a buy rating and price target of 48 on Oracle stock.
Senk expects Oracle to report cloud revenue of $1.05 billion, up 60%. And he said despite continued market share gains by No. 1 infrastructure-as-a-service cloud services provider Amazon.com (AMZN), he does not see that having a big impact on Oracle’s platform-as-a-service cloud business in coming quarters.
“For Amazon to take share in this market, we would need to see wholesale deflections off the Oracle database for large-scale production applications — which is a business risk we don’t believe large customers are willing to take,” Senk wrote in a research note.
Oracle stock fell 1 cent to 40.51 in the stock market today.
Drexel Hamilton analyst Brian White rates Oracle stock a buy, with a price target of 47.
“We believe the worst of this cloud transition is behind Oracle,” he wrote.
RBC Capital Markets analyst Ross MacMillan has an outperform rating on Oracle and price target of 43.
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