Oracle Results Seen as 'Solid' Despite EPS Miss

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By Senad Karaahmetovic

Shares of Oracle (NYSE:ORCL) are up nearly 2% in premarket Tuesday trading after the company reported its FQ1 results yesterday.

Oracle delivered an adjusted EPS of $1.03 on sales of $11.45 billion, which compares to the consensus of $1.08 on sales of $11.33 billion. The company said revenue from cloud services and license support jumped 14% YoY to $8.4 billion.

"Even without Cerner, our total revenue grew 8% in constant currency driven by Oracle's rapidly growing applications and infrastructure cloud businesses. These two cloud businesses now account for more than 30% of our total revenue,” said Oracle CEO, Safra Catz.

Oracle also declared a quarterly cash dividend of $0.32 per share, payable on October 25 to stockholders of record as of the close of business on October 12.

An Evercore ISI analyst raised the price target to $87 from $78 after “solid” results.

“While there are some moving parts in terms of the Cerner (NASDAQ:CERN) integration and the expanding cap-ex (and margin pressure) related to the growth in OCI, we believe the broader trends are heading in the right direction as it relates to the Cloud opportunity and we expect to get some additional color at the company’s upcoming analyst day (Oct 20th),” he said in a client note.

A Bank of America analyst also raised the price target as he went to $90 from $80 on Neutral-rated Oracle shares.

“Our estimate for FY23 margin is largely unchanged at 42%, as gross margin upside is offset by higher R&D and sales/marketing in or model. Revenue is expected to accelerate to double digits before EPS. Timing for the EPS reacceleration is unclear, highlighting an ongoing investment cycle,” he wrote.