Is Oracle Stock a Buy After Earnings Beat, Amazon Alliance?

VaselineSeptember 10, 2024

0 2 minutes read

Is Oracle Stock a Buy After Earnings Beat, Amazon Alliance?

Oracle ( ORCL ) shares are rising on Tuesday after the IT firm beat top and bottom expectations for its fiscal first quarter and announced a deal with Amazon.com. cloud platform (AMZN), Amazon Web Services (AWS).

In the three months ended Aug. 31, Oracle’s revenue rose 7 percent year over year to $13.3 billion, driven in part by 10 percent growth in its cloud services and license support segment, to 10.5 billion dollars. Its earnings per share (EPS) rose 17% year-over-year to $1.39.

“As cloud services has become Oracle’s largest business, both our operating income and earnings per share have accelerated,” Oracle CEO Safra Catz said in a statement. The executive added that revenue performance obligations rose 53 percent from last year to a record $99 billion, and “this strong contract delay will increase revenue growth through fiscal 2025.”

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Oracle’s results came in well above what analysts expected. Specifically, Wall Street was expecting revenue of $13.2 billion and earnings of $1.32 per share, according to Yahoo Finance.

However, the biggest news from Oracle was that it signed a strategic multi-cloud agreement with AWS, Catz said. The two companies will launch Oracle Database@AWS which aims to simplify database administration, billing and customer support, Oracle says.

The company also declared a quarterly dividend of 40 cents per share, payable on Oct. 24 to shareholders of record at the close of business on Oct. 10.

Is Oracle stock a buy, sell or hold?

Oracle shares are up nearly 50% for the year to date. Not surprisingly, most of Wall Street is bullish technology stock.

Conformable S&P Global Market Intelligencethe average analyst price target for ORCL stock is $161.28, representing an implied upside of about 3% from current levels. Furthermore, the consensus recommendation is Buy.

However, financial services firm CFRA Research is more on the sidelines, as evidenced by its Hold rating and $150 price target on the large-cap stock.

CFRA Research analyst Angelo Zino believes Infrastructure as a Service (IaaS) “remains the key driver of growth, doubling over two years.” This growth should accelerate in the current fiscal year and be supported by cloud expansion plans, he adds.

However, Zino also believes aggressive capital spending, which is expected to double in fiscal 2025, and $74 billion in net debt will limit free cash flow growth.

VaselineSeptember 10, 2024

0 2 minutes read

Vaseline

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