Oracle shares are trading near record levels after Q2 results

Written by: Stanko Iliev
December 18, 2020
  • Oracle shares are advancing this December, and at the current price, this company is fairly valued
  • Barclays and Morgan Stanley upgraded their price target on Oracle this December
  • Oracle has declared a $0.24/share quarterly dividend

Oracle (NYSE: ORCL) shares have advanced from $50 above $65.3 since the beginning of May, and the current price stands around $65. Barclays and Morgan Stanley upgraded their price target on Oracle this December, and the stock price is trading near record levels.

Fundamental analysis: Total revenue has increased above the expectations in Q2

Oracle Corporation is an American multinational computer technology corporation that sells software, cloud engineered systems, and enterprise software products. The company announced recently that it is moving its headquarters from California to Texas.

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Oracle reported Q2 results this month; total revenue has increased by 2% Y/Y to $9.8B while Q2 GAAP EPS was $0.80 (beats by $0.04). Total revenue has increased above the expectations (+ $20M), and the company declared a $0.24/share quarterly dividend.

Cloud services and license support revenue have increased by 4%, while the company’s adjusted operating margin improved to 47%.

“Our highly profitable multi-billion dollar Fusion and NetSuite Cloud ERP applications businesses grew revenue 33% and 21% respectively in Q2. These two strategic cloud applications businesses are major contributors to Oracle’s increased operating earnings and consistent earnings per share growth,” said Oracle CEO Safra Catz.

It is important to mention that Morgan Stanley upgraded its price target on Oracle from $62 to $67, praising the strength in Cloud momentum in operating margins.

Barclays also announced this December that Oracle has a positive risk/reward profile and raised its target from $62 to $66. According to Barclays, the company moves in the right direction with recurring revenue recovering from last quarter’s weakness.

Oracle shares are advancing this December, and at the current stock price, this company is fairly valued in my opinion. This stock is not overvalued, but it is now not the best moment to buy Oracle shares because the price could weaken if the US stock market enters the correction phase.

If the price falls in the upcoming period, every price in a range from $45 – $55 could be a good opportunity to invest in Oracle shares.

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Technical analysis: Oracle shares are trading near record levels

Oracle shares continue to trade in a bull market, and with a $191B market capitalization, this stock is reasonably valued.

Data source: tradingview.com

The critical support levels are $60, $55, and $50; $70 represents the resistance level. If the price jumps above $70, it would be a signal to buy Oracle shares, and the next target could be around $75, but if the price falls below the $50 support level, it would be a firm “sell” signal.

Summary

Oracle shares are trading near record levels after Q2 results, and at the current stock price, this company is fairly valued in my opinion. Total revenue has increased above the expectations in Q2, and the company declared a $0.24 per share quarterly dividend. The company is moving in the right direction, and the positive news is that Barclays and Morgan Stanley upgraded their price target on Oracle this December.