Software giant Oracle (ORCL) made the most of tough macro conditions and delivered beats across the board in last week’s F1Q21 earnings report.
Revenue came in at $9.37 billion displaying a 1.6% year-over- year uptick and beating the estimates by $190 million. There was an additional beat on the bottom line with Non-GAAP EPS of $0.93 coming ahead of the forecasts by $0.07.
BYOL (bring your own license) cloud licenses, Exadata, and upside from deals that moved from FQ4 into FQ1 were behind the boost to license and hardware revenue.
The only area of softness came from the Services segment in which growth decelerated by 8% CC (constant currency) compared to consensus calls for a 5% downturn.
Looking ahead, Oracle expects F2Q21 revenue to come in between 0% to +2% CC and 1% to 3% USD ($9.711 billion to $9.903 billion), above the Street’s forecast for $9.061 billion (-1.7% USD). The EPS outlook of $0.96-1.00 came ahead of consensus, too, which called for $0.85.
Raymond James analyst Robert Majek applauds a “solid” showing from the veteran software player and tells investors Oracle represents a safe investing haven in these uncertain times.
Majek said, “Longer-term, we continue to view Oracle as a defensive play with less business downside in a potential recession, and we are encouraged by some of the positive developments in the infrastructure business. We view ORCL as reasonably valued at 15x relative to the S&P 500 at ~19x NTM, and see an opportunity for long-term top-line acceleration as we exit COVID, as the app mix shifts toward SaaS, and as we begin to see the impact of both the autonomous database and Oracle’s second-generation cloud infrastructure (OCI).”
As a result, Majek reiterated an Outperform (i.e. Buy) rating and boosted the price target from $56 to $62. Investors could be pocketing a 9% gain, should Majek’s thesis play out over the coming months. (To watch Majek’s track record, click here)
The rest of the Street’s outlook for Oracle is currently a mixed bag. ORCL’s Moderate Buy consensus rating is based on 7 Buys, 15 Holds and 1 Sell. With an average price target of $60.46, the Street anticipates shares to stay range bound for now. (See Oracle stock-price forecast on TipRanks)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
