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Oracle shares down despite strong results and guidance; analysts say buy the dip

Published 03/10/2023, 05:35 AM
Updated 03/10/2023, 05:41 AM
Oracle shares down 4% following a slight Q3 revenue miss, dividend raised
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By Davit Kirakosyan and Senad Karaahmetovic

Oracle (NYSE:ORCL) shares are down more than 4% in pre-market Friday following the company’s reported Q3 results, with EPS beat but slightly lower-than-expected revenues. EPS came in at $1.22, compared to the consensus estimate of $1.21. Revenue grew 18% year-over-year (up 21% in constant currency) to $12.4 billion, compared to the consensus estimate of $12.43B.

Cloud services and license support revenues grew 17% to $8.9B, while Cloud license and on-premise license revenues came in at $1.3B (flat year-over-year). Cerner contributed $1.5B to total revenues in Q3.

“Oracle's cloud businesses now exceed $16 billion in annualized revenue. We remain the overwhelming market leader in Cloud ERP with approximately 10,000 Fusion ERP customers and over 34,000 NetSuite ERP customers. Our technically advanced and highly differentiated Gen2 infrastructure business continues to be in a hypergrowth phase—up 65% in Q3 in constant currency," said Oracle CEO, Safra Catz.

The company also hiked its dividend by 25% to $0.40 per share, which will be paid to stockholders of record as of the close of business on April 11, 2023, with a payment date of April 24, 2023.

Oracle expects FY revenue between $13.61B and $13.85B, beating the consensus of $13.66B. The adjusted EPS is seen between $1.56-1.60, again above the $1.45 consensus.

Mizuho analysts took note of a strong cloud momentum and impressive guidance.

"We believe investors may be underestimating Oracle’s potential over the medium-term to generate solid top-line and cash flow growth, and exceed its FY26 targets," the analysts said in a note.

Guggenheim analysts said Oracle's report was "impressive" given the current macro environment.

"We’d be aggressive buyers, as we believe Oracle is a different kind of unicorn in that it’s not immune to the economy (no one is), but it does have something that should at least partially offset it – that is OCI (Oracle Cloud Infrastructure)," they noted.

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