Tuesday saw a nearly 2% increase in Oracle (NYSE:ORCL) stock as the company reported Q1 2023 results that were above expectations due to strength in the cloud. This earned Oracle stock accolades from numerous Wall Street analysts.
Even when taking into account the foreign exchange headwinds that ORCL faced during the period, Phil Winslow of Credit Suisse said the results were good. He rates ORCL shares as outperforming and has a $115 price objective for them.
As Winslow noted to clients, “Oracle’s excellent Q1 results and Q2 guidance commentary strengthen our view that Oracle is well positioned to emerge as the 3rd or 4th vendor in the [platform-as-a-service/infrastructure-as-a-service] market and as the 2nd vendor in the [software-as-a-service] market. This allows the business to continue to develop.”
Winslow said, “Oracle’s NYSE:ORCL) infrastructure income increased by 58% annually and by 70% annually in constant currency.” The 8% yearly growth in organic sales for ORCL, which BMO Capital Markets analyst Keith Bachman rates as market performance, was also praised. And the analyst continued, “This is a logical outcome when taking into account the weakening global economy.”
Additionally, according to Bachman, “Oracle has maintained its [fiscal 2023] guidance of 30% [year-over-year constant currency] organic cloud growth, which we believe underlines the viability and strong market demand for Oracle’s cloud products.”
The outcomes, according to Bernstein analyst Mark Moerdler, demonstrate why investors should be paying close attention to ORCL. ORCL, despite entering the market late, “proved once again why they should be at the top of investors’ lists in today’s increasingly difficult times,” Moerdler wrote in a note. The company is likely to be “well-positioned to capitalize” on the move to the cloud as a result of contract wins for infrastructure and platform services, he continued.
Oracle’s Performance Outlook
ORCL generated $11.45 billion in sales during the quarter that ended on August 31 and earned $1.03 per share, excluding one-time items. That $11.45 billion in sales included $8.42 billion in cloud services and license support, a 14% increase from the previous year. According to ORCL, adjusted and net earnings per share would have increased by 8 cents if not for the strong U.S. dollar.
ORCL anticipates sales growth in the second quarter to range between 15% and 17% year over year, or between 21% and 23% on a constant currency basis. According to investment firm Guggenheim, ORCL may grow to become the fourth “hyper-scale” of cloud computing services. More on Oracle’s 2023 Q1 earnings.
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