Analysts See Potential in Oracle Despite Shares Plunging in Premarket
Analysts remain bullish on Oracle's growth prospects despite a weak Q2 guidance.
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Oracle saw its stock price plunge nearly 10% in market pre-open on Tuesday after the company issued weaker-than-expected guidance for the fiscal Q2 2024. Nevertheless, despite the slip-up, Global Equities Research and Guggenheim analysts reiterated their bullishness on Oracle.
Oracle’s Q2 Guidance Off the Mark
Shares of Oracle are plummeting sharply in premarket trading Tuesday after the software provider reported disappointing guidance for the current quarter. Meanwhile, earnings and revenue for the fiscal Q1 2024 were roughly aligned with Wall Street estimates.
The company reported adjusted earnings per share of $1.19 in the first quarter, slightly stronger than analysts’ projected $1.15 per share. Revenue came in at $12.45 billion, while analysts were looking for $12.47 billion.
Year-over-year, revenue grew 9% in the quarter that ended on August 31. Meanwhile, net income increased to $2.42 billion, or 86 cents per share, compared to $1.55 billion, or 56 cents per share, reported in the same period last year.
However, the software maker missed the mark regarding fiscal Q2 guidance. In particular, Oracle is forecasting an adjusted net income of $1.30 to $1.34 per share and revenue growth of 5-7%, while analysts called for $1.33 in adjusted earnings and revenue growth of 8%.
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Analysts Bullish on Oracle Despite Weak Q2 Outlook
Despite poor Q2 guidance and the subsequent share price drop, Global Equities Research analysts led by Trip Chowdry remain optimistic about Oracle’s stock. The strategists see the latest dip as a buying opportunity, citing strong revenue growth in the company’s cloud infrastructure as the reasoning behind its bull case.
Additionally, Oracle can charge its customers significantly more than ChatGPT maker OpenAI, the analysts wrote in a note to clients. Global Equities Research’s price target for Oracle’s stock sits at $140, compared to its current premarket price of $114.50.
Guggenheim analysts, spearheaded by John DiFucci, shared this sentiment, reiterating that Oracle’s growth story remains intact despite the last earnings report. The global investment firm set a price objective for Oracle at $150 per share.
Do you agree with analysts’ views that Oracle remains well-positioned to grow despite the latest earnings report? Let us know in the comments below.
Tim Fries
Tim Fries is the cofounder of The Tokenist. He has a B. Sc. in Mechanical Engineering from the University of Michigan, and an MBA from the University of Chicago Booth School of Business. Tim served as a Senior Associate on the investment team at RW Baird's US Private Equity division, and is also the co-founder of Protective Technologies Capital, an investment firm specializing in sensing, protection and control solutions.
