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After Buffett’s Exit, Oracle Survives Nomura’s Downgrade


Mar. 11 2019, Published 12:45 p.m. ET


On March 11, Nomura double downgraded Oracle (ORCL) from a “buy” to “reduce” and lowered its target price from $53 to $42. According to thefly.com, Nomura analyst Christopher Eberle said in a note to clients that Oracle’s share buybacks “can’t last forever.” Eberle also thinks that Oracle is “significantly underinvesting” in research and development. He added that Oracle is “financial engineering is reaching its breaking point.”

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Price action

While Oracle opened lower on March 11, it’s trading almost flat as of 11:40 AM EST. Among other technology names, IBM (IBM), Apple (AAPL), Microsoft (MSFT), and Amazon (AMZN) have risen 1.4%, 3.4%, 2.1%, and 2.3%, respectively. Before the double downgrade, Oracle also parted ways with Berkshire Hathaway (BRK-B). Warren Buffett, Berkshire Hathaway’s chairman, is known for long-term investments. Buffett exited Oracle in the fourth quarter within a quarter of buying the stake. Berkshire Hathaway announced its decision to exit Oracle on February 14.

Warren Buffett

After the news became public that Berkshire Hathaway exited Oracle, the stock closed with gains of 0.47% on February 15. Oracle slightly outpaced the gains of the NASDAQ Composite (QQQ). While Berkshire Hathaway exited Oracle in the fourth quarter, the stock has looked strong in 2019. The stock has gained 16.8% year-to-date based on the closing prices on March 10.

For Oracle, nine analysts recommended a “strong buy,” 20 recommended a “hold,” and two recommended a “sell.” Oracle’s mean consensus target price of $52.45 is similar to its current stock price.

Read Is Warren Buffett Losing His Influence Over Equity Markets to learn more.


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