Drexel Hamilton Raises Estimates For Oracle Corporation (ORCL) Following 4Q:FY16 Results

Oracle Corporation (NYSE:ORCL) shares are up over 2% this morning after the software giant reported quarterly earnings which met the Street’s expectations, while sales were better than expected as the company booked more cloud software-as-a-service customers and expanded margins.

In reaction, Drexel Hamilton analyst Brian White reiterated a Buy rating on the stock with a price target of $51, while raising estimates. For 1Q:FY17, the analyst is increasing his revenue forecast to $8.73 billion from $8.43 billion and adjusting his pro forma EPS estimate to $0.58 from $0.57. For FY:17, White is raising his revenue estimate to $38.37 billion from $37.17 billion and increasing his pro forma EPS estimate to $2.80 from $2.78.

White commented, “Oracle reported 4Q:FY16 non-GAAP sales of $10.6 billion (down 1% YoY), which beat our estimate of $10.46 billion (Street was also at $10.46 billion) and was flat YoY in CC, while pro forma EPS of $0.81 slightly missed our EPS projection of $0.82 (consensus was at $0.82).”

“Oracle is now trying to become the first cloud company to reach $10 billion in SaaS/PaaS revenue. We believe the worst of this cloud transition is behind Oracle and our model indicates the company is past the trough in its operating profit cycle. In our view, Oracle offers investors the characteristics of a more defensive tech stock with the benefits of a rapidly growing cloud portfolio,” the analyst added.

According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Brian White has a yearly average return of 8% and a 56% success rate. White has an -3.2% average return when recommending ORCL, and is ranked #130 out of 3976 analysts.Out of the 35 analysts polled by TipRanks, 19 rate Oracle stock a Buy, 12 rate the stock a Hold and 4 recommend to Sell. With a return potential of 14.5%, the stock’s consensus target price stands at $44.23.


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