Oracle Price Target Lowered As Quarterly Business Report Falls Short

Database software vendor Oracle ( ORCL ) received a downgrade and price-target cuts Friday in the wake of its quarterly results, featuring a business outlook that fell short of estimates.

[ibd-display-video id=3025352 width=50 float=left autostart=true] After the close Thursday, Oracle reported revenue and adjusted earnings for its fiscal second quarter that came in slightly above estimates, but it issued guidance for its cloud computing business for the current quarter that was below views.

"While we commend Oracle's cloud transition as strategically sound, its efforts to catch up to the public cloud infrastructure vendors may have come too late," Oppenheimer analyst Brian Schwartz wrote in a research note to clients. "We think the strategy will take many years to make up the ground and possibly lead to customer workloads attrition along the way."

Oracle is undergoing a multiyear transition from traditional on-premise software licensing and maintenance support to a model driven by cloud subscriptions. Oracle began pushing aggressively into cloud computing about three years ago, negatively impacting sales and earnings.

For the quarter, though, Oracle reported total cloud revenue of $1.53 billion, slightly lower than consensus of $1.56 billion.

RBC Capital Markets analyst Ross MacMillan lowered Oracle to sector perform from outperform and cut his price target to 51 from 53.

"After cutting cloud estimates two weeks ago we are trimming cloud numbers again," MacMillan wrote in his research note. "Competitive threats to the technology/database business remain intense."

Oracle shares were down 5.6%, near 47.30 during morning trading in the stock market today .

IBD'S TAKE:Oracle shares plunged below its 50-day moving average ,as a double-bottom formation broke down. The stock was at a 6-month low and below its 200-day line.

KeyBanc Capital Markets analyst Monika Garg cut her price target on Oracle to 56 from 61 but maintained an overweight rating.

Credit Suisse analyst Brad Zelnick maintained an outperform rating on Oracle and a price target of 62.

"Consistent with our thesis and with a difficult-to-predict yet definitive cloud transition, we focus on traditional metrics, which are strong in aggregate," Zelnick wrote in a research note to clients. "We would be buyers on any weakness caused by confusion around mix."


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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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