Oracle Trading forecasts and signals

Oracle (ORCL) has reported for the third quarter of 2021. In the context of accelerated growth in the previous reporting period, Oracle's results look less confident. At the same time, the management gave a strong forecast for the full fiscal year.The issuer's revenue increased by 4% YoY, which was at the level of the initial management estimates, but 0.3% lower than the consensus forecast. Excluding the effect of exchange rates, sales increased by only 2%. Diluted non-GAAP EPS increased by 10.7%, exceeding market expectations by 6%.The business segment "Cloud services and licensing support" grew by 6% against an increase of 8% in the last quarter. In annual terms, sales of all cloud solutions (SaaS plus IaaS) amounted to $10 billion, or 25% of the total LTM revenue. The segment's sales dynamics have traditionally been supported by key cloud solutions: Fusion apps (+26%), Fusion ERP (+30%), NetSuite ERP (+26%). Among the new large clients of CFO ERP solutions, Oracle noted Bank of America, Macquarie, Humana Vanguard (partially). The volume of sales of applied products amounted to $3 billion. Revenue from infrastructure solutions increased by 3% to $4.3 billion.The cloud infrastructure products sub-segment (including IaaS and self-managed databases) increased by 80% YoY. The database sub-segment expanded by 6%. The CFO noted the strengthening of the issuer's positions in this direction: the new generation of MySQL from Oracle now includes a new HeatWave query processor in memory and a new AutoPilot management dashboard. According to Oracle estimates, HeatWave is 100 times faster than Amazon's Aurora counterparts and 10 times more productive than RedShift or SnowFlake engines.The license segment lost 8% amid the continued transition of customers to cloud products. The hardware solutions segment decreased by 6% YoY, which can be considered a very weak result against the background of the growth of Dell's similar direction (+3%, server solutions increased by 6%).Oracle's non-GAAP operating margin remained at the level of last year and amounted to 45%. A lower level of the effective tax rate (18%) and a share repurchase of $8 billion had a positive impact on the dynamics of non-GAAP EPS.An important positive aspect of the quarterly conference call was the strong forecast of management for the full fiscal year (ending in May 2022). According to the new guidance, revenue growth will accelerate to 4-6% against the background of an increase in the share of cloud solutions in the business structure. In addition, the CEO said that he expects the growth rate of cloud solutions to remain at the level of 25% until the end of the fiscal year. It is also important to note that the amount of obligations to be fulfilled increased by 10% at the end of the quarter, to $38.7 billion, and gross deferred revenue increased by 5%. The forecast for the next quarter remains the same: sales growth is expected at the level of 3-5%, non-GAAP EPS - at the level of 2-6%.We assess Oracle's results neutrally positively: the growth rate decreased compared to the data of the second quarter, while management gave a strong forecast for the full fiscal year, and the growth momentum of cloud solutions (including infrastructure cloud products) remains at a high level. There is no noticeable pressure on the operating margin.As a result, we raise the target price for ORCL shares to $83.4 per paper. The recommendation is ...

Since the beginning of the year, Oracle shares have grown by more than 40%, but the potential for further growth remains. The old-timer of the technology sector is experiencing a rebirth: in addition to maintaining a leading position in the field of databases, the company is actively developing areas related to backend infrastructure and SaaS.Among the drivers, it is worth noting the new product Autonomous Database-a cloud database service that should significantly reduce the cost of operations for users. One more important point: as subscription revenue takes up an increasing share of Oracle's revenue, and management moves from California to cheaper Texas, the overall profitability of the business increases.Oracle has an extensive product line that covers the needs of customers in terms of supply chains, finance, sales, HR and much more. About $46 billion of cash is on the balance sheet, which provides huge opportunities for development, including for purchases of firms in promising industries.According to the results of the quarter ended in May, revenue increased by 8% y/y. The operating margin increased by 2.5 points, to 47%. Management is going to become a full-fledged cloud hub for its customers, through which all the services necessary for business will be provided. Salesforce, which regularly acquires firms from various industries, is trying to do something similar. However, Oracle says that they have an important advantage over such companies: their product line was created on their own basis, and does not consist of a large number of diverse applications from different ...

Oracle shares recovered to pre-pandemic levels in July last year, since then the quotes have had a strong uptrend. At the beginning of June 2021, a significant correction took place in the shares, but at the beginning of July, the quotes not only recovered, but also rewritten the historical maximum.Oracle is one of the largest software manufacturers, as well as a supplier of server equipment.In total, since the beginning of the year, the company's quotes have increased by 35.7%, and over the past 12 months — by 52.6%. Let's look at the latest events in the company and the immediate prospects after the record update. Events The cloudsLast week, the Department of Defense canceled JEDI's 10-year cloud computing contract with Microsoft. This decision was lobbied by Amazon and Oracle in court, now Oracle can take part in a new tender.The question of further development of the company has been at an impasse for a long time. But earlier this year, Oracle made important steps in cloud technologies to reduce the significant backlog from larger representatives of the industry.So, in the database software, the main innovation was the Autonomous Database system. It is a cloud-based product that uses machine learning and artificial intelligence to automate security, backup, install updates and other tasks that usually require an army of administrators. First of all, this reduces costs for the company itself and gives it additional income.Last month, the company released financial results for the quarter ended in May 2021. It highlighted important points of income growth:Application Portfolio: Revenue of Fusion ERP (financial software for large companies) increased by 46%. Fusion HCM (personnel management software for large companies) increased by 35%. NetSuite ERP (financial software for small businesses) increased by 26%.The cloud infrastructure business, including Oracle Cloud and Autonomous Database software, has grown by more than 100%.Whether Oracle will be able to compete for the Pentagon contract is still unknown, since not all companies meet its conditions - but Oracle has been saying for years that its cloud solutions meet the technical requirements of the government.If Oracle takes the contract, it will not have a significant impact on revenue, but it will be evidence that the company is able to compete with Amazon AWS and Microsoft Azure. Such an intrigue pushes the quotes and attracts the interest of investors. Extensions During the publication of the report, the company announced an increase in capital expenditures. In the 2022 fiscal year, they have almost doubled from the level of the 2021 fiscal year and will amount to $4 billion. Although Oracle claims its competitive advantage, it still does not have a significant share of the "cloud" market.It is difficult to evaluate the results, since investors do not have a complete picture of income. Above, we talked about significant growth in different segments, but total revenue increased by only 4% Y/Y.A positive factor is a fairly significant free cash flow, which in 2021 amounted to $13.8 billion. In the past, thanks to him, the company was able to support the repurchase program: since 2011, the number of shares has decreased from 5 billion to 2.9 billion. And the company has been paying dividends since 2009, constantly increasing them. At the beginning of 2021, the company increased its annual dividend from $0.96 to $1.28.The expenses are still more than the FCF, which forced the company to use promissory notes. An increase in current capital expenditures and in general all expenses may trigger a reduction in the repurchase program or an increase in debts. Technical picture Oracle shares have been in a steep uptrend since last summer. The recent rise contributed to the entry of the daily and weekly RSI into the overbought zone. On the daily basis, there is a bearish divergence (orange line) at all.After a significant rise, a correction naturally begins, and this case is no exception. If buyers do not ignore the overbought, and no new drivers are received, the price may soon drop to $84 and move to the test of the 21-day moving average. When descending below $76, we can talk about a new benchmark for a decline - $72-68.If the company still wins the tender and continues to capture the cloud technology market, then in the future this will be an excellent driver for continuing growth to $100, while there is no complete confidence in this. Is it worth buying The risks for correction are now high, so the input from the current levels looks excessive. Moreover, the price is already higher than the average target of analysts - $81.6, but they vary within $60-115. 19 of the 28 recommendations of analysts-hold, only 5-buy and 2-sell.Oracle needs something more than a possible contract with the Pentagon, although it can increase the investment attractiveness of the company. As long as there is uncertainty in this issue, investors will closely monitor events and increase volatility in ...

Oracle Corporation is one of the largest software developers and suppliers of server installations in the world. The company is engaged in hardware and software, as well as various related services.Oracle management has divided its activities into the following segments:The cloud and license sector, which specializes in the sales and supply of various infrastructure platforms and technologies.The hardware sector, which deals with software and hardware products, such as Oracle Engineered Systems. This also includes the OS, virtualization software, storage systems, and hardware support.The service sector, which is responsible for consulting and educational support for clients.Oracle's revenues have slowed in growth due to noticeable competition, but shareholders remain in the black. Over the past year, the issuer's shares have risen by 50% and by 140% in annual comparison. A large-scale share buyback in 2011 provoked the growth of securities.Since 2009, the corporation has been regularly paying dividends, which are growing. Since the beginning of this year, they have increased from $0.96 to $1.28Read more: Dividends: what is it and how to get themDevelopmentOver the past five years, Oracle has been actively developing in the field of cloud technologies. The company's management believes that the so-called “completeness” of the offer makes them out of competition. The company has not only applications and platforms, but also a favorable infrastructure.All this, together with a huge experience, gives the issuer the opportunity to succeed in corporate software in the direction of cloud computing. According to the results of the 4th quarter of this year, the company's management decided to allocate about $4 billion for the 2022 financial year in this direction, which is twice as much as a year earlier.Representatives of Research and Markets published the results of a study according to which the average annual growth rate of spending on cloud services in the world will be 18%. Representatives of Kinsta cloud hosting claim that Oracle has only 6% of this market, so there is a lot to grow, despite strong competition.When companies such as Amazon AWS and Microsoft Azure were already known for their cloud integrations, Oracle was just beginning to develop in this direction. Today, the issuer can compete with IBM and its Red Hat hybrid cloud, which makes it possible for both private and public cloud systems to interact.Oracle's management plans to develop in data centers, which increases the corporation's capital expenditures to $ 4 billion. But this step should stimulate the development of the company's cloud business.Reasons to buy Oracle sharesStability of the level of operating profitabilityExcluding GAAP, Oracle's operating margin has remained at 44% for the past 2 years. According to the results of the first half of this year, it increased by 4% year-on-year, reaching 46%. This happened due to a reduction in operating expenses.The growth of the indicator indicates that the company does not allocate large amounts for the conversion process to the cloud environment, and that it is able to influence the cost of corporate software at a competitive level.BuybackAccording to experts, the company made the last share repurchase in order to increase profit growth by 1 share due to unchanged revenue.On the one hand, this is true, but on the other, Oracle's buyback began with the aim of reducing the surplus of securities on the exchange. This goal was achieved by 41%.If the issuer continues the process of repurchasing shares together with stable sales growth, its profit may grow by 13% this year and by 7% next year. This will enable the issuer to succeed over its competitors. It is worth noting that IBM is not able to achieve the same despite the active buyback process.Dividend paymentsOracle trades on the market with a fourteen-fold forward profit and pays forward dividends of 1.5% on an ongoing basis. A low payout ratio of 28% gives the company an opportunity for future development, despite the fact that payments have not been organized since the beginning of the coronavirus pandemic.Financial securityIssuers with a stable financial flow and balance sheet are the best thing for an investor during a crisis in the market. Oracle had the opportunity to generate $12.1 billion of free financial flow over the past year. According to the results of the last quarter, the cash cushion amounted to $28 billion. There were more than $10 billion in outstanding shares.That is, the corporation has enough funds to implement all business processes, despite the crisis.Quarterly reportAccording to the results of the last quarterly report, it became known that Oracle's revenue amounted to $11.23 billion, and adjusted earnings per share reached $1.54. Both indicators exceeded analysts' expectations.Read more: EPS: about Earnings per Share with examples in simple wordsOracle management called these results outstanding, taking into account the development of Fusion and NetSuite cloud applications.The first company specializes in ERP systems of cloud technologies, and the second in CRM, as well as ERP, PSA and E-commerce.At the end of the 3rd quarter, Fusion ERP showed an increase of 30%, and at the end of the 4th quarter by 46%. The CRM direction of Fusion HCM grew by 23% and 35% in the 3rd and 4th quarters, respectively. NetSuite's growth was 24% and 26% in Q3 and Q4, respectively.The accelerated growth of the entire infrastructure of the corporation affected the growth of profit per security in the current financial year to 21%.Oracle's cloud services segment grew by 8% year-on-year, reaching $7.4 billion, which exceeded forecasts.Oracle shares: to buy or to sellThe very direction in which Oracle is known is promising and large, despite not even a huge number of existing competitors.Experts believe that the company's shares will attract the attention of market participants, however, now they are overbought, so you should only count on a slight increase. The asset should retreat a little to continue its growth from the side channel of 88-90 dollars.Analysts predict a decline in Oracle securities to the $82 mark and a return to growth only after ...

Let's just say that oracle is not the strongest paper in the technology industry. The issuer has been building software for businesses for 40 years, showing weak sales growth compared to giants such as Amazon and Microsoft. Oracle executives are often criticized for often organizing buyouts rather than expanding their core business.Relatively Everything. Yes, compared to tech mastodons like apple and Amazon, Oracle's profits are small, while Oracle's DBMS share has grown 75% over the past 5 years, and total corporate profits, including reinvested dividends, have been around 90%. Note that this company is considered more resilient than other aging tech giants like IBM and others.A few words about the company and its business. Oracle Corporation, based in the United States, is a major server hardware and software company. The company specializes in database management systems, middleware, and business applications. The most famous is the Oracle Database software, which the company has published since its inception.The company operates in three main segments.1st segment of cloud and on-premises software. In this segment, the company develops such areas as the SaaS solution (software as a service), PaaS models (platform as a service), IaaS, infrastructure as a service (cloud structure as a service), as well as software license renewal and product support.Hardware segment. In this segment, the company is active in two areas: the development of hardware products and their support.Service segment. This segment includes a wide range of services, such as support, advice, training, etcThe secret of the company's successThe company posted impressive growth figures in its recent earnings report as the pandemic set low payouts for 2020. While experts say the transition from Oracle to the cloud is slow, the tech giant is reaping the rewards of its acquisitions and investments. Its shares are still trading at a moderate P / E ratio of 17, with more than $ 37 billion in cash.What is the secret of the company's success? First, Oracle has moved its enterprise software to cloud services. The transition proved difficult, but the expansion of cloud services driven by major acquisitions such as NetSuite eventually offset slower growth in on-premises software sales.Second, Oracle spent most of its free cash flow (FCF) on the repurchase, not the dividend. Over the past decade, the issuer has reduced its shares by almost 42 percent, which has steadily increased earnings per share and the share price.Read more: EPS: about Earnings per Share with examples in simple wordsWhy does the company buy up cloud servicesOracle, like IBM and other older software companies, has reached its limits over the past few decades. The market was divided, and nothing seemed to change the balance of power. Everything changed with the advent of the SaaS service. The new service immediately became widespread, it is easy to install, update, configure. The emergence of SaaS destroyed the old business structures and drew the line "before" and "after".This paradigm shift has forced the old tech giants to play by new rules. Some companies, such as Microsoft, have been successful. Others, such as IBM, have failed. The transition to the Oracle cloud was more successful than IBM, but less impressive than Microsoft.The turning point for Oracle was the migration of the on-premises database and enterprise software to the cloud, as well as the acquisition of cloud-related companies.Gradually, Oracle's revenue began to grow. So, in the first half of the 2021 fiscal year (which began in May last year), this indicator increased by 2%. The expansion of cloud services compensated for the slowdown in local operations. In the new financial year, experts expect an increase in revenue by 3%.Stable operating profitability OracleOracle's non-GAAP operating margin remained unchanged at 44% in fiscal years 2019 and 2020. In the first half of 2021, it increased from 42% to 46% year-on-year, as operating expenses fell by 5%.This margin increase shows that Oracle is not spending too much money on moving to the cloud, and that this continues to affect prices in the enterprise software market.Oracle buys back its sharesExperts often say that the repurchase of shares of Oracle, on which the company spent 100% of free cash flow over the past 12 months, was used to increase the value of the shares against the background of low profits.Of course, the Oracle share buyback was also necessary. Thus, over the past 10 years, the issuer has reduced the number of shares issued by it by almost 42%. This approach has proven successful compared to other technology companies, which have often used buybacks to avoid diluting capital by issuing new securities.According to analysts, if Oracle continues to buy back its shares and supports sales growth, it can increase the company's profit by 13% in 2021 and by 7% in 2022. By comparison, IBM, which has reduced share buybacks over the past two years, is still struggling with declining profits and losses.Read more: Dividends: what is it and how to get themBuy or sell Oracle shares?Oracle is trading at 14 times forward earnings and is ready to pay a dividend of 1.5% per annum. Dividend payments have remained unchanged over the past two years, but this low payout rate of 28% gives the issuer the opportunity to start increasing them in the future.Such a low valuation and decent profitability make this company attractive for investment, especially if rising US interest rates and other macroeconomic factors force investors to abandon more expensive shares of technology companies.This does not mean that the oracle is an ideal investment document. The company has questions, but they intend to solve them. This company is focused on growth and easily overcomes any financial crisis. We think that from time to time it is worth betting on a marathon runner, not a sprinter, and investing in oracle is exactly what you need.Overall revenue growth accelerated to 3% in recent months, compared with 2% growth in the last two quarters. That figure was $10.1 billion, against expectations of $10.07 billion.The company is opening new data centers to strengthen its position in competition with cloud computing leaders Microsoft, Amazon and Google.Slowly but surely, it will achieve all its goals, which makes these stocks a good choice for a long-term investment.Shares of this company with short stops and pullbacks have been steadily growing since January. The latest growth momentum has just ended. Buyers did not have enough strength to capture the level of $84.70. The asset retreated to the level of $83.00 and now wants to grow again.If we look at the history, we can see that long pullbacks are not typical for this paper. We suggest buying the company's shares from the current levels with a medium-term goal of around ...