Oracle Corporation

Oracle Corporation (NYSE: ORCL) is a database company selling enterprise resource planning (ERP) software to businesses worldwide. Oracle, founded in 1977, was the first commercial SQL-based relational database management system. Oracle now has 430,000 clients in 175 countries, with 136,000 people serving them.

ORCL Details

Latest News:

• Collaboration By Velocity Global: Velocity Global, a prominent global talent solutions provider, announced on June 13, 2022, that it would collaborate with Oracle to improve the future of work for businesses. Oracle's unrivalled approach to supporting multinational workforces and Velocity Global's work platform provide customers and prospects with the resources they need to thrive more efficiently.
• Oracle Completes Acquisition of Cerner: ORCL stated on June 7, 2022, that most of Cerner Corporation's outstanding shares had been legitimately tendered. The agreement was finalized on June 8, 2022.
• Announcement of Dividend: The company's board has announced a quarterly cash dividend of USD 0.32 per share. This dividend will be paid to investors on July 26, 2022, with a record date of July 12, 2022.

 Full Year FY22 Results: (Year Ended May 31, 2022)

• Decent Topline Performance: In the FY22, the company’s Fiscal year 2022 total revenues were up 5% in USD and up 7% in constant currency to USD 42.4 billion, driven by Cloud services and license support revenues were up 5% in USD and 6% in constant currency to USD 30.2 billion and Cloud license and on-premises license revenues were up 9% in USD and 12% in constant currency to USD 5.9 billion.
• A decline in Operating Income: The operating income for FY 2022 was USD 10.9 billion, down from USD 15.21 billion in FY21, due to an increase in operating expenses from 62% to 74% of sales.
• Liquidity Position: The cash position for FY 22 was USD 21.38 billion, with total current assets of 31.63 billion and total current liabilities of USD 19.51 billion, indicating a solid future liquidity position.

Key Risks:

• Supplier Concentration Risk: The company relies on suppliers to develop, manufacture, and deliver the necessary technologies and components for hardware products that it markets and sells to customers and some technologies that can only be purchased from a single vendor due to price, quality, and technology.

Valuation Methodology: Price/Earnings Per Share Multiple Based Relative Valuation

(Source: Analysis by Kalkine Group)

Stock Recommendation:

Oracle continued to improve its top line results again in Q4FY22 growing 10% in constant currency. These consistent increases in their quarterly revenue growth rate typically have been driven by their market leading Fusion and NetSuite cloud applications. But in the quarter just gone by, the company also experienced a major increase in demand in their infrastructure cloud business—which grew 39% in constant currency. It also seems that this revenue growth spike indicates that their infrastructure business has now entered a hyper-growth phase. Couple a high growth rate in their cloud infrastructure business with the newly acquired Cerner applications business—and Oracle finds itself in position to deliver stellar revenue growth over the next several quarters

Considering the company’s strong fundamentals, Strong margin profile, Strong liquidity, associated risks, and current valuation. We recommend a “Buy" rating on the stock at the current market price of USD 68.50 as of June 16, 2022, at 10:29 AM PDT.

1-year technical chart as of June 16, 2022, at 10:29 AM PDT, Source: REFINITIV. Analysis by Kalkine group

Technical Summary Analysis

Technical Indicators Defined: - 

Support: A level where-in the stock prices tend to find support if they are falling, and downtrend may take a pause backed by demand or buying interest.

Resistance: A level where-in the stock prices tend to find resistance when they are rising, and uptrend may take a pause due to profit booking or selling interest.

Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.

Note 1: The reference data in this report has been partly sourced from REFINITIV.  

Note 2: Investment decisions should be made depending on the investors' appetite for upside potential, risks, holding duration, and any previous holdings. Investors can consider exiting the stock if the Target Price mentioned as per the valuation has been achieved and subject to the factors discussed above. 

Note 3: The report publishing date is as per the Pacific Time Zone.