Shares of Oracle Corp. to a higher record on Friday, after Barclays analyst Raimo Lenschow bought a recommendation, about a week ahead of the business software company’s earnings report, as it sees valuation “volatile”. despite signs that it is accelerating growth.
Lenschow raised its rating to fat, having been at equal weight since January 2019. It also raised its stock price target to $ 80, which is about 14% above normal levels, from $ 66.
The ORCL stock,
a 7.0% rise in afternoon trading, parked an earlier rally of as much as 9.3% to a full-time intraday high of $ 71.72.
Lenschow noted that investors had been paying close attention to Oracle stock for some time. Although the company had “cloud jewels”, such as Fusion, Oracle Cloud Infrastructure (OCI) and an automated database, the company had many “underperforming” businesses that developed good growth.
“However, we believe that the ‘good’ cloud yields are now large enough to offset the declining headlines from the declining yields, pushing overall growth higher, and IT consumption is better than an additional civilian, ”Lenschow wrote in a research note for clients. “This should encourage investors to rethink the name, especially with the volatile valuation.”
The stock, on track for a fourth-record close this week, has now risen 17.1% over the past three months, while SPDR trading fund S&P S&P XSW gained 6.5% and the S&P 500 SPX index covered 3.2%.
Oracle expects to report third-quarter fiscal results after the March 10 closing bell. FactSet’s consensus is that earnings per share will rise to $ 1.11 from 97 cents a year ago, and revenue will grow 2.6% to $ 10.05 billion. Cloud services and licensing support revenue are expected to increase 4.6% to $ 7.25 billion, while cloud license and pre-license revenue are expected to decrease 1.8% to $ 1.21 billion.
Lenschow expects Oracle to “deliver well” against consensus expectations, as “the movement accelerating growth” should begin with third-quarter results.
“We are also easily seeing a favorable position for Q4 management [comparisons with year-ago results] and conservative consensus expectations, ”Lenschow wrote.
Oracle has surpassed EPS expectation for 17-straight quarters, surpassing revenue expectation 11 times during the race. The stock has lost ground the day after earnings were reported 11 times in the past 17 quarters, for an average decline of 4.3%, while the six had an average gain of 7.6%.
Over the past 12 months, Oracle shares have risen 46.2% while software and ETF services have risen 55.1% and the S&P 500 has climbed 26.3%.