Oracle: RBC Ups to Buy, Piper Credit Suisse See Progress
Posted on June 29, 2012 at 13:50 PM EDT
Shares Oracle ( ORCL ) are up $1.32, or almost 5%, at $29.49, one of the best tech performers today, after the stock received a few upbeat notes from analysts trumpeting signs of progress in various aspects of its business. RBC Capital 's Robert Breza raised his rating on the shares to Outperform from Sector Perform, with a $36 price target, up from $33, while slightly trimming his revenue estimate for the year, writing that he's now got greater "visibility" into foreign exchange issues for Oracle. He also thinks the company has put behind it issues of execution that had dogged its performance last fiscal year. Breza raised his fiscal 2013 estimate for the 12 months ending in May to $38.72 billion from $38.8 billion, with $2.63 per share in profit. That is slightly below the consensus $38.94 billion and $2.66 the Street is modeling. Writes Breza, Seasonality should be a favorable trend through FY end now that Q1 guidance is out of the way as Oracle's business builds through the year more so than most. FX was more impactful to the business in Q4 than anticipated (a 400 bps headwind for new licenses vs expectations for a 300 bps headwind) and is expected to be a 500 bps headwind in Q1. Management has traditionally been very transparent on FX and its potential impact should be better reflected in consensus numbers at this point. These two dynamics had been a sticking point for us and likely others as well. The additional color should help refocus investors on the fundamentals, which have remained strong Meantime, Credit Suisse's Philip Winslow reiterates an Outperform rating, and a $40 price target, writing that the company's software applications should see a lift as customers head toward the end-of-life of the current "E-Business Suite" product:
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