Oracle (ORCL) PT Raised to $48 at UBS

UBS raised its price target on Oracle (NYSE: ORCL) to $48.00 (from $45.00) while maintaining a Buy rating following strong results.

Analyst Fatima Boolani commented, "Hardware and services misses in ORCL's F3Q results were handily offset by Cloud and a surprise license upside, with disciplined opex – G&A especially low on 1x items – delivering 42.5% OPM, +100bps ahead of consensus. A lower tax rate also helped (UBSe ~3c impact), lifting F3Q EPS to 69c or 7c ahead of Street. This marks the first Q since Nov'14 ORCL has beat both consensus revs and EPS, and combined with 1) healthy ARR growth +73% cc - renders the reiterated FY $2B +40% y/y target more achievable, 2) indications more operating efficiency can be had (headcount -800 q/q the largest since May'10) - still targeting double-digit EPS growth in FY18 by net income improvement vs. buyback driven share count reduction, 3) demonstrable balance sheet strength - ORCL announced an unanticipated +27% dividend increase with results; 4) reasonable valuation; and 5) optionality from tax reform we think shares could garner incremental interest with inflecting fundamentals providing the basis for ORCL's valuation disconnect to narrow vs. peers and market multiples; maintain Buy."

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