FBR Trims PT on Oracle (ORCL) to $41; Could Solutions Facing Key Window of Opportunity
FBR & Co. lowers its price target on Market Perform-rated Oracle Corp. (NYSE: ORCL) from $44 down to $41 following Q2 results issued Wednesday night.
Analyst Daniel Ives commented: Last night, December 16, ORCL delivered F2Q16 (Nov) results essentially in line on revenue and beating slightly on the bottom line, a dynamic we would characterize as "better than feared," given a painful cloud transition coupled with ongoing challenges for Oracle's traditional license business. However, the company gave a softer outlook, which speaks to the challenges ahead. Oracle's newer cloud solutions (IaaS, SaaS, PaaS) have been a major focus for investors and remain a key ingredient in Oracle's recipe for success. We believe this is to be a critical window of opportunity for Oracle for finding success in the cloud, as other large technology stalwarts (e.g., SAP, IBM, Microsoft), as well as pure-play cloud vendors, are all going after this next generation of cloud spending over the next 12–18 months. While we believe some investors may wait for a turnaround story at Oracle, given that it has talked a great talk, the lack of consistent results, an empty M&A strategy, and major secular challenges are hard to ignore, thus making it tough to be bullish on the name at current levels.
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