Why Oracle Stock Isn't a Buy Right Now Amid Tough Outlook

Oracle stock rose by 1.2 percent, while the S&P 500 lost 0.8 percent on Dec. 9. The stock is up +$0.70 from the previous closing price of $59.03 on the volume of 11,731,643 shares. Over the past year, the S&P 500 is up 16.9 percent, while Oracle stock has gained 5.8 percent. Is ORCL stock a buy or sell at this price?

Oracle is scheduled to release its earnings results for the second quarter of fiscal 2021 on Dec. 10 after the markets close. In the second quarter, Wall Street analysts expect Oracle to post sales of $9.8 billion, which would be 1.9 percent higher than $9.6 billion in sales in the second quarter of fiscal 2020. Analysts also expect Oracle to post an adjusted EPS of $1.00 in the second quarter compared to $0.90 in the same quarter a year ago.

Oracle stock has become a major talking point on social media platforms. One of the investors on Stocktwits thinks that Oracle is the cheapest enterprise software company. Oracle's cloud segment is growing by 30 percent and overtaking the decline in perpetual license revenues. The investor sees a multi-year base breakout at about $61.

Oracle stock pays an annual dividend of $0.96 per share with a dividend yield of 1.61 percent. The company’s most recent quarterly cash dividend payment was made to stockholders of record on Oct. 22.

As of 8:33 a.m. ET in pre-market trading on Dec. 10, Oracle stock was up by about 0.3 percent at $59.89. The stock has risen by 0.8 percent in the last five days and 5.8 percent in the last year. The stock is trading 4.6 percent below its 52-week high of $62.60 and 50.4 percent above its 52-week low of $39.71.

Oracle's last stock split was about 20 years ago. With the stock trading at about $60 per share, there isn’t an imminent need for Oracle to do a stock split. Investors shouldn’t expect a stock split anytime soon.

According to estimates compiled by CNN, Oracle’s median target price of $62.50 is 4.6 percent above its current stock price. Among the 28 analysts tracking Oracle stock, 11 recommend a buy, 15 recommend a hold, and two recommend a sell. The highest target price of $115 is 92.4 percent above the stock's current price, while the lowest target price of $50 is 16.3 percent below the stock's current price.

Oracle stock isn’t a buy right now. The company's outlook remains tough. Consumer spending and demand will likely remain low due to the coronavirus pandemic. Oracle still hasn’t benefited from its deal with TikTok’s U.S. assets. Political and legal disputes will likely persist into 2021 and the Biden administration.