UPDATE: Oracle (ORCL) Market Share Threatened, Berenberg Downgrades to Sell

June 6, 2013 6:48 AM EDT Send to a Friend
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Price: $41.44 +1.27%

Rating Summary:
    22 Buy, 17 Hold, 2 Sell

Rating Trend: = Flat

Today's Overall Ratings:
    Up: 13 | Down: 18 | New: 41
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(Updated - June 6, 2013 2:52 PM EDT)

Berenberg downgraded Oracle (NASDAQ: ORCL) from Buy to Sell with a price target of $28. Analyst Daud Khan noted Oracle is facing competition on all fronts, and he thinks this could affect valuation.

"Oracle's Q3 earnings miss was its second in the last 12 months. Looking back at history, an earnings miss is a rare occurrence and it has posed the question of whether Oracle is entering a period of volatility due to competitive pressures in the market and whether this is indeed the calm before the storm, " said Khan.

SAP's (NYSE: SAP) HANA poses a specific threat to Oracle's market share.

"We do not believe that Oracle has suffered any revenue headwind from the rapid rise of SAP's HANA, but we have heard customers stating that they are currently paying for HANA and due to enterprise agreements are continuing to pay maintenance to Oracle. This scenario is likely to change over the next two years . . . If SAP's HANA is a success, we estimate its market share rising to between 15-20% from its current low single digits. This inevitably will have an impact on Oracle’s market share, but more importantly we believe it could affect the margin structure of the industry due to the entrant of another major player," he Khan.

For an analyst ratings summary and ratings history on Oracle click here. For more ratings news on Oracle click here.

Shares of Oracle closed at $34.12 yesterday.


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