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The Zacks Analyst Blog Highlights: Oracle, Adobe Systems, China Telecom and NetEase - Press Releases

For Immediate Release

Chicago, IL - March 18, 2015 - Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include the Oracle Corp. ( ORCL - Free Report ), Adobe Systems ( ADBE - Free Report ), China Telecom Corp. Ltd. ( CHA - Free Report ) and NetEase, Inc. ( NTES - Free Report ).

Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of the Day pick for free .

Here are highlights from Tuesday's Analyst Blog:

Oracle, Adobe Post Mixed Earnings, Cloud Data

After the closing bell on Tuesday, Oracle Corp. ( ORCL - Free Report ) reported its fiscal Q3 2015 results, from the quarter ended February. For the first time in many quarters we finally saw a one-penny positive earnings per share (EPS) of 65 cents in the quarter (accounting for stock-based compensation) for the iconic tech giant. Adobe Systems ( ADBE - Free Report ) also reported its fiscal Q1 2015 (February) results, and the global software firm saw higher-than-expected revenues on an in-line 27 cents per share (again, accounting for stock-based compensation).

Both companies focused on their cloud space, which both consider an important and growing segment of their businesses. Oracle met cloud-growth expectations of 5 percent, though cloud-based solutions make up only single-digit amounts of Oracle's total revenues (roughly 5-8 percent). Adobe, while better-than-expected in its overall sales in the quarter, actually posted a much weaker cloud subscriber number: 517K in the quarter, as opposed to expectations of around 570K.

For Oracle, changing over much of its business model and away from traditional revenue streams such as standard licensing growth, which was down 4 percent year over year, is the main reason for relatively lackluster earnings announcements over the past several quarters until today. Oracle's margins shrank in the quarter, which is likely something the company will address in its upcoming conference call. That said, ORCL stock is up about 1 percent in after-market trading.

Conversely, Adobe has typically performed well over the past year, posting an average quarterly positive earnings surprise of more than 28 percent until today's meet on the bottom line. Adobe is also further along in its cloud-centric development than is Oracle (although Mark Hurd's statement for Oracle today mentioned 28-29 percent in cloud growth, which is good). The all-time high for ADBE stock, in fact, was reached just a couple weeks ago when shares touched $80.30 late last month. Adobe shares are down more than 3 percent in late trading today, likely due somewhat to missing cloud subscriber expectations.

ChinaStocks Rise on Stimulus Hopes: 2 Choices

Comments from Premier Li Keqiang powered China stocks close to a six-year high on Monday. Premier Li promised to implement necessary stimulus measures in case growth was significantly affected. The benchmark continued to surge on Tuesday, touching levels last experienced in May 2008.

Earlier Stimulus Measures

In Nov 2014, the People's Bank of China (PBOC) announced its surprise decision to reduce interest rates. This was the first reduction in rates undertaken in more than two years. Market watchers were taken by surprise because since that time the PBOC had stuck to more moderate stimulus measures.

This was followed by further monetary easing in February. The People's Bank of China announced that it was reducing the reserve ratio by 50 basis points. Analysts said that the central bank's move followed a series of weak economic reports. This indicated that other measures might be needed to be taken by the government to boost the economy.

Li's Reassurance

During his sole news conference for the year so far, Premier Li provided reassurances that his government would take further steps to manage the economic situation. This included steps to boost growth, combat deflation as well as deal with other important economic issues. Speaking about the economy, he said that the government was attempting to take a middle path, striving to boost growth and simultaneously implementing major structural reforms.

Premier Li added that the country will successfully leverage the lower cost of borrowing to ease China's transformation from an economy driven by exports to one powered by higher consumer demand. The focus will then shift to consumers and the services sector.

Positives Remain

China's economy has grown at the slowest pace in nearly 25 years. China's economy registered growth of 7.4% in 2014. This is significantly lower than 7.7% achieved in 2013. However, this has not hindered an impressive recovery by the benchmark Shanghai Composite Index. The benchmark index has increased 73% over the last 12 months since its slide in Aug 2009. That descent had erased more gains than any other equity market across the world.

These gains have been fueled by record levels of margin debt and improved access for international investors. This includes the Shanghai-Hong Kong trading link while another link with the Shenzhen exchange is planned for later this year. Analysts expect that this bull run will not end like the series of gains experienced till 2009. Morgan Stanley believes that there is further upside since earnings growth is expected to increase.

Our Choices

Below we present two such China stocks which gained on Monday, each of which also has a good Zacks Rank.

China Telecom Corp. Ltd. ( CHA - Free Report ) offers wireless and mobile telecom services in China. The company also offers international telecom services, leases network equipment and is involved in ecommerce.

China Telecom holds a Zacks Rank #1 (Strong Buy) and has expected earnings growth of 56.3%. The forward price-to-earnings ratio (P/E) for the current financial year (F1) is 11.19. The stock gained 1.4% yesterday.

NetEase, Inc. ( NTES - Free Report ) is the operator of an online interactive community in China. The company has three operating segments. These are online game services, advertising services and mail, wireless VAS services.

Apart from a Zacks Rank #2 (Buy), NetEase has expected earnings growth of 25%. It has a P/E (F1) of 13.09. The stock gained 3.7% yesterday.

There are indications that the world's second largest economy is ready to turn the corner. Additionally, Premier Li's comments have enthused investors who believe growth might still touch targeted levels. This is why these stocks would make for a prudent choice.

Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of the Day pick for free .

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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.

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