Oracle (ORCL) Posts First Top-Line Beat in a Year, Wedbush Notes; PT to $42

Wedbush analyst Steve Koenig raised his price target on Oracle (NYSE: ORCL) to $42.00 (from $38.00) following Q2 results but maintained Neutral rating. Koenig said cloud results are getting better.

"We are seeing signs that ORCL's sales capacity additions are becoming more productive, the 12c product cycle is poised to help results, and cloud revenue is accelerating on strong bookings," Koenig said. "Although hardware results were much improved from 1Q (roughly flat Y/Y), we expect they will continue to be choppy as SPARC server sales are likely declining. The main positives for ORCL shares: (1) valuation looks attractive, especially in terms of FCF yield; (2) we believe there is plenty of institutional money looking for large-cap outperformance following an impressive run for MSFT shares; and (3) ORCL's cloud revenues are accelerating. We remain on the sidelines for two reasons: a single quarter of good execution doesn't give us confidence that ORCL will perform more consistently, and consensus revenue and EPS expectations over the next 12 to 24 months remain too aggressive, in our view."

The firm noted ORCL posted a top-line beat for the first time in a year, growing revenue by 7% in constant currency (and 3% organic, by our estimate).

For an analyst ratings summary and ratings history on Oracle click here. For more ratings news on Oracle click here.

Shares of Oracle closed at $41.16 yesterday.

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