MKM Partners Remains Sidelined on Oracle (ORCL) Ahead of 4Q Release
MKM Partners reiterates a Neutral rating and $42.00 price target on Oracle (NYSE: ORCL) ahead of the company's 4Q earnings report. ORCL is scheduled to report on June 16th, following the close of markets.
Analyst Kevin Buttigieg commented, "Unlike past quarters, license revenues should not miss expectations given a low bar, while cloud revenue growth should again be strong, aided by the expiration of prior promotions. F1Q17 consensus looks achievable, and would mark solid Y/Y growth in operating margins and EPS, which bulls are apt to see as ORCL completing its cloud business model transition. But the steep ramp in F4Q16 SaaS & PaaS ARR bookings could prove challenging, and FY17 consensus is dependent on license revenue declines not worsening, although even if they don't, the expected near double-digit declines will likely continue the debate about how much cloud business is net new to Oracle, particularly in light of concerns that Oracle's cloud revenues, while not improperly reported, may overstate actual customer usage. Even with EPS growth, the FY17 P/E at 14x is slightly ahead of stock history and the large cap tech peer group."
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Shares of Oracle closed at $39.28 yesterday.