Rosenblatt Sets Bullish Expectations on Oracle Corporation (ORCL) Ahead of F1Q18 Print

ORCL's ability to show improving margins is key for short-term success, says analyst.

On the back of three consecutive quarterly beats delivered from Oracle Corporation (NYSE:ORCL), there is no question that expectations are high as the software giant readies to release its first fiscal quarter earnings print for 2018 this Thursday. Will Oracle keep the winning streak alive? Analyst Marshall Senk of Rosenblatt weighs in among the bulls.

According to his channel research, Senk estimates that the company usually does better in even quarters than odd quarters; however, “this fiscal year has gotten off to a better start than prior campaigns with sales plans established early, changes to cloud to go market well in place after last year and large customers continuing to work with both the Oracle IaaS and PaaS as they implement hybrid cloud strategies.” The analyst is estimating for a 4.6% rise in total revenue of $9.0 billion, which includes a 63% bump in cloud revenue to $1.1 billion. Additionally, Senk expects EPS for the quarter to rise by 9% reaching $0.60.

Pointing to improved execution, changes in sales and shifting resources, the analyst believes that the company will continue to see improved operating leverage, observing: “Our research points instead to normal start of year shuffling as sales management looks to continue to put more resource in the Oracle Digital channel and shift resource away from underperforming areas including Hardware and BX (business intelligence). These moves further our confidence in improved operating leverage in this year as evidenced in our model.”

As such, the analyst maintains a Buy rating on ORCL stock with a price target of $58.00 representing a 10% rise over current trading levels. (To watch Senk’s track record, click here)

Senk is confident that despite the threat from Amazon in the cloud department and a level of dissatisfaction with support costs, ORCL has locked in its customer base, underscoring: “We have yet to speak with a sizable Oracle customer that is looking to move completely off the platform. This is what drives our thinking that Oracle has a real opportunity to emerge from this transition as a relevant company and remains a driver of our positive view on the stock.”

Tipranks analytics reveal ORCL as a Strong Buy. Out of 26 analysts polled by TipRanks (in the past 3 months), 21 are bullish, while 5 are sidelined on Oracle stock. With a 7% upside potential the stock’s consensus price target stands at $56.38.

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