It used to be a foregone conclusion that when Oracle (NASDAQ:
) reported it would blow earnings out of the water but over the
past couple of years, that reputation has gone the way of Apple
Still, investors count this as one of those announcements that
serves as a proxy for the technology sector.
Oracle is expected to announce fiscal third quarter revenue of
$9.38 billion-a rise of 3.5 percent year over year. Analysts
polled by Thompson Reuters expect EPS of 0.66-a six percent year
over year increase. Expect profit of 88 cents, a seven percent
increase and sales of $11.5 billion, up five percent.
Analyst Matthew Hedberg from RBC Capital Markets said,
"Results are likely to be highlighted by strong database sales,
in-line results from their applications business and hardware
will likely be down year-over-year but expected to grow in
"We remain positive on the opportunity and the stock, as the
company continues through the seasonally strong second half of
RBC reiterated it's "Outperform" rating and upped its price
target from $37 to $39.
technology reporter Jon Fortt said, "Oracle has been hiring like
mad, telling its applications story to customers in an effort to
lure business away from competitors. If the sales machine is
still going, that suggests Oracle isn't just sounding bullish,
it's making bullish plans."
The Bear Case
This is a stock up 43 percent since May and, like the broader
market indices, continues to print 52 week highs. Investors are
cautious going into earnings because they know this means that
the stock has to outperform or risk a profit taking sell off.
According to CNBC's Jon Fortt, the May quarter is its
strongest so forward guidance, it's tone about software licensing
going forward, and growth, particularly in the hardware and cloud
segments is significant.
The chart over past nine months is healthy. After a 30 percent
gain from May to September, the stock entered a three month
basing pattern serving to unwind overbought conditions. The
upside then resumed adding another 20 percent. Currently, the
stock is testing strong support at its 20 DMA, 50 DMA, and lower
trend line-all of which converged to be within one percent of
A break below these support levels could trigger a strong
correction. Given its recent price action, traders should
consider hedging to protect against a priced-to-perfection
(c) 2013 Benzinga.com. Benzinga does not provide investment
advice. All rights reserved.
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