Monday, October 3, 2022
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Oracle fails to convince the market with profits below expectations

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Oracle shows, with its earnings for its first fiscal quarter, one for lime and one for sand. For one thing, its earnings per share have fallen slightly short of what Wall Street in general and the Nasdaq in particular expected. We are talking about $1.03 per share against the consensus that pointed somewhat higher, at $1.07 per Oracle share. To which the unfavorable exchange rates have undoubtedly contributed, up to eight cents as confirmed by the company.

However, revenues have confirmed the expected amount: 11,450 million dollars, with an improvement of 5% compared to the previous quarter and 18% compared to a year earlier, with Cerner, acquired for 28,000 million a year ago, which already contributes to the group 1,400 million dollars.

Already de facto, the company’s cloud services and license support account for the bulk of revenue, growing even better at 14% and far outpacing the Wall Street consensus.

In its guides, it highlighted that it expects earnings per share of between 1.16 and 1.20 dollars and an increase in income, in its second fiscal quarter that could accelerate between 15 and 17%, in both cases below what encrypted the market.

In its stock chart, we see that the value recovers weekly positions, 4%, compared to monthly falls that reach 3.4% for Oracle. The quarterly advance is estimated at 8.6% while, so far this year, its falls are close to 12%.

Regarding the news of the company, it should be noted that its net debt has increased considerably after the purchase of Cerner by about 28,000 million dollars a year ago. In fact, Oracle’s indebtedness already reaches 57,600 million dollars, while its cash flow reaches 5,000 million, with a sharp drop of 13,750 million in the last year. Among the measures to reduce costs, he has included a high cut in personnel that he has not specified, except that it is significant, which positively affected his actions.

Regarding the recommendations on the value, we collect those that TipRanks shows us, with a target price of 89.67 dollars per share and a very moderate advance margin of just 16.5%. Of the 20 analysts who follow the value and that the firm collects, 8 opt to buy, 10 more to maintain and 2 to sell their shares in the market.

On the other hand, two firms have just ruled on the value. One of them is Barclays, which leaves Oracle in the same weight as the market, with a target price of 82 dollars per share. A recommendation that has occurred just before the results, although its analyst Raimo Lenschow highlights that it will be the first quarter in which the software company – for whom it is also its first fiscal quarter of the year – includes the technology services provider of Cernet information, so it already predicted many changes.

He predicted that the improvement in its figures, due to the negative comparison of last year, was easy to achieve, although not so much the evolution of the exchange rate in its presence in other countries with a currency other than the dollar.

The second of these is New York-based Jefferies, which also recommends keeping its shares in its portfolio with a somewhat tighter target price of $80 per share. Its analyst Brent Thill considers that, from the results, investors should look at its growth from within since Oracle registered, in its last financial year, the highest growth adjusted with the exchange rate in almost a decade, although its results did not reach expectations, especially in sales, these should recover, he says, in the current year.

As for the premium indicators that Investment Strategies prepares, we see that the value, in bearish mode, cuts by two points to 1.5 of the 10 possible for the value, only positive with medium-term volatility, which is decreasing for Oracle and the volume of business in the long term that is growing.

On the negative side, the downward trend undoubtedly stands out in its two aspects, both in the medium and long term, with a slow and fast total moment that is negative, volume of business in the medium term decreasing to which is also added the volatility or range long-term amplitude that is increasing for the value.

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