BTIG Impressed by Oracle's (ORCL) Q4 Results, Outlook; Affirms at 'Buy'
BTIG affirms Oracle (NYSE: ORCL) with a Buy rating and $44 price target following the company's FQ416 results reported Thursday night.
Analyst Joel Fishbein was positive on Oracle's results, saying that the numbers affirm inflection of its cloud business, which will drive operating leverage and high-single-digit long-term EPS growth.
Fishbein continued, Oracle’s cloud SaaS & PaaS segment continues full steam ahead, posting a second straight quarter of >60% y/y revenue growth in constant currency. Management believes this pace is sustainable for the next few years, and we are just at the beginning of the “new normal” where growth in cloud revenues offsets declines in the on-premises business. Moreover, the gross margin improvement should fuel operational leverage beyond FY17 (we expect >60% by end of FY17 vs. ~49% for FY16).
On Oracle's outlook, Fishbein said, We are impressed by F1Q17 SaaS & PaaS revenues guidance of +77.5% y/y cc (at the midpoint) and believe total cloud revenues (including IaaS) guidance of ~55% could prove conservative. We have been more punitive than the rest of the Street on the cannibalization of the on-premises business, but there could be upside to estimates if declines here moderate below double-digits.
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