Oracle’s upbeat quarter fails to excite investors: should you buy the pullback?
- Oracle’s fiscal fourth-quarter results beat expectations on revenue and earnings Tuesday after markets closed.
- The stock has since created a downward price gap after falling sharply on Wednesday.
- ORCL looks relatively undervalued. Should you buy the pullback?
Oracle Corporation (NYSE:ORCL) shares plunged on Wednesday morning after announcing its fiscal fourth-quarter results on Tuesday evening. The stock created a downward price gap to trade at $75.96 per share, down from Tuesday’s highs of about $82.70.
Oracle outperformed analyst expectations on revenue and earnings, but the upbeat performance still failed to excite investors. The stock now trades at exciting valuation multiples, making it a good option for value investors.
Why ORCL pullback could be an opportunity to buy
Are you looking for fast-news, hot-tips and market analysis? Sign-up for the Invezz newsletter, today.
Oracle reported strong growth across several segments of the business. Fusion ERP business segment grew 40% in the most recent quarter at the back of the 30% growth reported in Q3. The company’s Fusion Human Capital Management unit sales increased 35% in Q4, again posting higher growth than the 23% in Q3. Oracle’s NetSuite segment was up 24% in Q3 and 26% in Q4, while Gen 2 Cloud Infrastructure, including Autonomous Database, more than doubled on a Y/Y basis.
Oracle’s current stock price of about $75.96 values the stock at a P/E ratio of approximately 16.75. The forward P/E ratio of about 14.85 is even more compelling, making ORCL shares an exciting option for investors. Oracle also trades at a forward dividend yield of 1.57%, which should boost shareholder confidence.
Technically, ORCL shares have plunged to the oversold levels of the 14-hour RSI in the 60-min chart. It indicates a significant shift in the market sentiment from bullish to bearish. The pullback pushed Oracle’s stock price to the 100-hour moving average creating an opportunity for a rebound.
Investors can target short-term rebounds at about $79.62 and $82.68. On the other hand, investors looking to short ORCL shares and capitalize on the downward momentum can target profits at approximately $74.05 and $71.15.
Bottom line: ORCL shares look poised for a rebound after the pullback
In summary, Oracle posted significant growth in some of its leading business segments. The Q/Q improvements will also be a compelling feature for investors. The stock price crossed to oversold levels after creating a downward price gap. It now looks likely to bounce back after finding support from the 100-hour moving average.
Therefore, ORCL looks like an exciting short-term buy ahead of the rebound. Wednesday’s pullback could be an opportunity to own one of the best cloud stocks in the market.
Where to buy right now
To invest simply and easily, users need a low-fee broker with a track record of reliability. The following brokers are highly rated, recognised worldwide, and safe to use: