20 Jun

Markets Give a Thumbs Up to Oracle’s Better-than-Expected Results

WRITTEN BY Mohit Oberoi, CFA

Oracle

Yesterday, Oracle (ORCL) released its results for the fourth quarter of fiscal 2019. The company reported revenues of $11.14 billion in the quarter, which topped analysts’ estimates. Oracle’s revenues rose 1% YoY in US dollar terms and 4% in constant currency terms. Oracle’s Cloud Services and License Support segment posted revenues of $6.8 billion in the quarter.

Earnings beat

Oracle’s GAAP EPS rose 36% YoY to $1.07, while the non-GAAP EPS rose 23% to $1.16. Oracle’s bottom line was also better than what analysts were projecting. The stock was trading higher in aftermarket trading yesterday as markets gave a thumbs up to its earnings beat. In regular trading, Oracle stock closed down marginally but is up 16.7% year-to-date based on yesterday’s closing prices. Oracle CEO Safra Catz said in the earnings release In Q4, “our non-GAAP operating income grew 7% in constant currency—which drove EPS well above the high end of my guidance.”

Upbeat guidance

Along with the earnings beat, Oracle also provided upbeat guidance. In the first quarter of fiscal 2020, Oracle expects revenue growth between 0% and 2%. It expects to post non-GAAP EPS of $0.80 to $0.82 in the quarter. Oracle expects its fiscal 2020 revenues in constant currency to grow at a faster pace as compared to fiscal 2019 and is targeting double-digit EPS growth. Oracle’s fiscal 2020 earnings guidance was better than what analysts were expecting.

After Oracle’s earnings beat and upbeat guidance, several analysts raised the stock’s price target. Evercore ISI and RBC Capital Markets raised Oracle’s target price by $2 each to $55 and $59, respectively. Jefferies also raised Oracle’s target price from $61 to $66. However, Oracle’s mean consensus price target of $54.92 represents a potential upside of only 4.3%. Earlier this week, Macquarie downgraded Oracle from “outperform” to “neutral.”

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