Oracle's Cloud Business Drives 40% Rally in Shares

Oracle's shares have experienced a substantial 40% increase this year, largely due to the tremendous growth of its cloud computing business. The company's Oracle Cloud Infrastructure (OCI) has successfully established itself as a strong contender against the likes of Amazon Web Services, Microsoft Azure, and Google Cloud.

While Oracle thrives in the cloud sector, it faces challenges in fully integrating Cerner, an electronic health records company that was acquired for a staggering $28 billion in 2022. Oracle is currently reevaluating Cerner's strategy, focusing on delivering cloud-based solutions. However, this transition is causing disruptions within Oracle's business and putting pressure on its overall growth rate.

The financial results for Oracle's November quarter are set to shed more light on the intersection of these two factors. The company is set to report its earnings after the closing of the trading session on Monday.

According to FactSet, revenue estimates for the quarter stand at $13.1 billion, reflecting a 6.3% increase, with a projected profit of $1.33 per share. Oracle had initially anticipated a revenue growth rate of 5% to 7%, or 3% to 5% when adjusted for currency fluctuations. Excluding the recent acquisition of Cerner, Oracle foresees growth rates of 8% to 10%, or 6% to 8% when adjusted for currency.

Stay tuned for Oracle's upcoming financial report and discover how its cloud business and integration challenges have influenced its quarterly performance.

Oracle Projects Strong Cloud Revenue Growth

Key Details

• Oracle's projected total cloud revenue, excluding Cerner, is expected to be between 29% and 31%. When adjusted for currency, this figure stands at 27% to 29%.
• The profit forecast for Oracle for this period is $1.30 to $1.34 per share.
• Wall Street estimates revenue of $13.3 billion for the February quarter, representing a 7% increase. The projected profit per share is $1.37.
• Citi analyst Tyler Radke expects strength in OCI (Oracle Cloud Infrastructure) to be partially offset by some weakness in apps.
• Radke maintains a Neutral rating on Oracle shares but has revised his target price to $122 from $120.
• Oracle's stock price rose by 0.6% to $114.27 in late-morning trading before the results were announced.

Analyst Perspectives

• TD Cowen's Derrick Wood, who maintains an Outperform rating and a $137 price target on Oracle shares, predicts that the quarter will meet expectations, with 4% constant currency growth. Wood notes that Cerner's impact on overall growth may be significant. He emphasizes that investors are particularly interested in OCI and sees positive trends and strong growth ahead.