Rosenblatt Confident on Oracle Corporation (ORCL) Heading into the FQ4 Earnings

Oracle Corporation (NYSE:ORCL) is set to deliver its fourth fiscal quarter print for the year next Wednesday after the bell tolls and Rosenblatt analyst Marshall Senk is angling for a rise in revenue and better operating leverage come fiscal 2018. Ahead of the quarterly earnings, the analyst reiterates a Buy rating on ORCL with a price target of $55, which represents a 23% increase from where the stock is currently trading.

For the fourth fiscal quarter, the analyst projects $1.4 billion in cloud revenue, which would denote a 65% climb, $10.38 billion in total revenue, and EPS of $0.77.

Senk notes that it is usual for customers to postpone business to the close of a fiscal year, so he anticipates a “typical” performance for a fourth quarter, as the software giant usually exhibits more robust sequential step-ups in “even” quarters. ┬áMoreover, “Our channel research points to another quarter of improved execution which began to surface last quarter. We attribute this primarily to changes in the sales management organization in late Q2 and early Q3 and the realization that there was still significant work to do given the normal back end loading of the fiscal year,” continues the analyst.

“While we have picked up some investor speculation regarding sales turnover, our research points instead to normal shuffling in sales as management looks 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 F18.”

What of rival reports highlighting value-added reseller (VAR) challenges affecting new license sales? Senk surmises, “Our perspective is that the midmarket (covered by VARs) is moving to cloud very aggressively and Oracle is incenting partners to accelerate that shift. This clearly will impact new license sales,” adding that some big customers for the giant are in talks to adopt the IaaS platform “in a significant way,” which would solidify maintenance revenue and bring new IaaS usage revenue.

According to TipRanks, which measures analysts’ and bloggers’ success rate based on how their calls perform, four-star analyst Marshall Senk is ranked #1,244 out of 4,569 analysts. Senk has a 68% success rate and gains 7.7% in his annual returns. When recommending ORCL, Senk yields 9.4% in average profits on the stock.

TipRanks analytics demonstrate ORCL as a Strong Buy. Out of 9 analysts polled by TipRanks in the last 3 months, 7 are bullish on Oracle stock while 2 remain sidelined. With a return potential of nearly 10%, the stock’s consensus target price stands at $49.11.

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