After Earnings, How Analysts Rate Oracle Now

24/7 Wall St. has reviewed the analysts making key calls after Oracle’s report. While shares are lower on the heels of the report, many views look very mixed after the news.

Oracle had $0.53 in earnings per share on $8.45 billion in revenue for the most recent quarter. Thomson Reuters had consensus estimates of $0.52 per share on $8.53 billion, and last year’s equivalent report showed $0.62 in earnings per share on $8.6 billion in revenue.

As far as guidance ahead, revenues would be down 2% to up 1% on a constant currency basis. Adjusted earnings were targeted at $0.63 to $0.66 per share. Analysts had the consensus at $0.65 and $9.54 billion in revenues, which implied a drop of about 1%.

So, how do analysts rate Oracle now?

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Credit Suisse maintained its Outperform rating, and the firm has a $50.00 price target. This outlook addressed currency headwinds as the company stands to benefit from several drivers in the next year. Four key points were listed:

• The potential for further improvements in sales force productivity
• Adoption of the In-Memory option of Oracle Database 12c
• Increasing customer adoption of Oracle Fusion Applications
• The massive market opportunity for engineered systems

Bank of America Merrill Lynch reiterated its Buy rating, and its price objective is $48.00. The firm’s investment rationale said:

The license decline of 9% to 10% in the last two quarters is self-induced near-term phenomenon in light of the cloud transition. The second quarter and second half implied mid-teens license decline could reset the bar and limit stock volatility. We think the risk is to the upside if the company can deliver on lowered license expectations.

Canaccord Genuity said that Oracle’s fundamental improvement continues and the firm sees value here. They reiterated a Buy rating but lowered the price target to $47.00 from $50.00. Richard Davis said:

While it’s more fun to own exciting, fast-growing companies alongside the financial equivalent of the “cool kids,” sometimes you can make money in stocks by owning companies that investors conclude aren’t as bad as they thought. Indeed, it is during the early stages of a perception change that we have seen the most alpha … we believe the company is not as bad as investors believe … the business is improving and the stock does not fully reflect those on-the-ground facts. … We still believe our Oracle Buy is a good idea, but we haven’t yet won the good timing award. That said, we still expect investors to come to a more favorable view of the business and award the stock another multiple point or two (EV/FCF) as the cloud transition materializes in revenue growth. If so, there is every reason to expect Oracle to deliver a total return in excess of 20% over the next 12 months.

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Some other analyst calls were positive and some were cautious:

• Morgan Stanley maintained it as Overweight, but cut the target to $45 from $50.
• Nomura maintained it at Buy, but lowered its target to $44 from $49.
• Oppenheimer reiterated its Perform rating, though it does not list an official 12 month to 18 month price target. The firm’s note said another soft quarter means higher risks to its annual estimates.
• Stifel maintained a Buy rating, and the target was lowered to $45 from $47.
• Susquehanna maintained its “positive” rating, but lowered its target to $47 from $50.
• Wunderlich maintained it at Hold, but lowered its target price to $43 from $47.

Oracle shares were last seen down 3.1% at $37.06 in midday trading on Thursday. The consensus analyst target price was $47.25, although that is likely to tick lower by $1 to $2 in the coming days as more analyst target prices get assimilated. Oracle’s 52-week trading range is $35.14 to $46.71,