Oracle’s (ORCL) Flat Revenue Keeps This Top Analyst Sidelined on the Stock

2018 has been a disappointing year for Oracle (ORCL) investors. While database and cloud rivals, including Amazon and Microsoft, have seen their stocks rise sharply, Oracle’s stock is down 7% for the year. Unlike Amazon and Microsoft, Oracle’s cloud business has not taken off the way investors had hoped it would, which is reflected in its deflated stock price. As such, top rated analyst Brian White of Monness is remaining “on the sidelines” and maintains his Neutral rating.

According to TipRanks, which measures analysts’ and bloggers’ success rate based on how their calls perform, 5-star analyst Brian White has a yearly average return of 18.2% and a 65% success rate. White has a 6.8% average return when recommending Oracle, and is ranked #44 out of 5,108 analysts.

White believes Oracle “will approach” his 2QFY19 revenue estimate, as he expects a 4% quarter-on-quarter rise in sales (which is below the five-year average of 9%). The analyst adds that Oracle will benefit from an aggressive buyback program and expects EPS to “slightly exceed” his estimates.

White says that so far in 2018 “Oracle has managed to stumble through the year, with muted financial results and a languishing stock price.” The analyst projects “cloud license & on-premise license revenue of $1.20 billion in 2Q:FY19 and cloud services & license support of $6.68 billion, combined with hardware revenue of $899 million and services sales of $813 million.”

Moving forward to3QFY19, White is “modelling revenue of $9.83 billion (up 2% when adjusting for ASC 606; Street is at $9.86 billion) and non-GAAP EPS of $0.82 (Street is at $0.84).” Adding that his “3Q:FY19 sales estimate represents nearly 3% QoQ growth, above the flattish performance over the past five years. For FY:19, Oracle’s outlook calls for revenue growth to accelerate relative to FY:18 with plans for double-digit non-GAAP EPS growth.”

Wall Street is not convinced just yet on this tech player, but cautious optimism is circling, as TipRanks analytics demonstrate ORCL as a Buy. Based on 20 analysts polled in the last 3 months, 8 rate a Buy on Oracle stock while 12 issue a Hold. The 12-month average price target stands at $54.13, marking about 17% upside from where the stock is currently trading. (See Oracle’s price targets and analyst ratings on TipRanks).


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