Why Oracle Stock Is Down By 4% Today

Oracle Stock Declines As Company’s Revenue Misses Analyst Estimates

Shares of Oracle found themselves under pressure after the company released its quarterly results. Oracle reported revenue of $9.73 billion and adjusted earnings of $1.03 per share, beating analyst estimates on earnings and missing them on revenue.

The company stated that its quarterly results were “excellent” but the market had another opinion as it focused on the revenue miss. It should be noted that Oracle stock was up by more than 35% since the beginning of this year before the release of the earnings report so the market expected healthy growth on both the top line and the bottom line.

It should be noted that the market has been in a bearish mood in recent trading sessions as traders continued to take profits near record highs. In this environment, it’s not surprising to see that the market is not happy with the fact that Oracle missed analyst estimates on revenue.

What’s Next For Oracle Stock?

Oracle stock faced strong resistance near the $90 level ahead of the release of the quarterly report, and it looks that it will need material upside catalysts to move above this level and get to the test of all-time highs.

Analysts expect that Oracle will report earnings of $4.61 per share in the current year and $5.12 per share in the next year, so the stock is trading at roughly 17 forward P/E.

These valuation levels do not look expensive in the current market environment, but it should be noted that earnings estimates showed no growth in recent weeks which is not good for a stock that is trading near all-time high levels.

The general market is clearly in a profit-taking mode right now which is typical for September, and it remains to be seen whether Oracle stock will be able to attract speculative traders in the upcoming trading sessions after the company’s quarterly revenue fell short of analyst estimates.

For a look at all of today’s economic events, check out our economic calendar.

Oracle Could Sell Off into the 70s

Oracle Corp. (ORCL) is trading lower by more than 2% in Tuesday’s pre-market after posting a fiscal Q1 2022 profit of $1.03 per-share, $0.06 better than estimates, while revenue rose a modest 3.8% year-over-year to $9.73 billion, matching consensus. Fusion ERP cloud revenue rose a healthy 32% while NetSuite ERP cloud revenue gained 28%. IaaS plus Saas cloud revenue of $2.5 billion booked 25% of total quarterly revenue, with cloud services and license support up a modest 6% to $7.4 billion.

Strong Cloud Growth

Inline Q2 earnings-per-share (EPS) guidance of $1.09 to $1.13 triggered a swift sell-the-news reaction, dropping the stock to the lowest low since late July.  However, Oracle has still gained nearly 35% so far in 2021 so the bearish reaction can be viewed as simple profit-taking, rather than a long-term change in trend. Even so, it’s now trading below the 50-day moving average for the first time since June, raising odds from even lower prices in coming sessions.

Executives boasted that cloud income has become a larger proportion of total revenue, noting that “Oracle’s two new cloud businesses, IaaS and SaaS, are now over 25% of our total revenue with an annual run rate of $10 billion. Taken together, IaaS and SaaS are Oracle’s fastest growing and highest margin new businesses. As these two cloud businesses continue to grow they will help expand our overall profit margins and push earnings per share higher.”

Wall Street and Technical Outlook

Wall Street consensus is rather bearish, with a ‘Hold’ rating based upon 5 ‘Buy’, 1 ‘Overweight’, 18 ‘Hold’, and 1 ‘Underweight’ recommendation. In addition, three analysts recommend that shareholders close positions. Price targets currently range from a low of $60 to a Street-high $115 while the stock is set to open Tuesday’s session about $2 above the median $85 target. This mid-range placement suggests that Oracle is fully-valued, especially with the mixed guidance.

Oracle failed a 2019 breakout above resistance in the low 50s in March 2020 and bounced strongly, returning to the prior peak in September. It cleared that barrier at year’s end, entering a heathy uptrend that stalled in the low 90s in July. An August breakout attempt failed, reinforcing a trading range that’s now set off weekly sell signals. The range floor below 88 is now being tested, raising odds for continued downside could reach the upper 70s in the fourth quarter.

For a look at all of today’s economic events, check out our economic calendar.

Disclosure: the author held no positions in aforementioned securities at the time of publication. 

Earnings Calendar Quiet Next Week; U.S. Inflation Print Could Dictate Market Trend

Earnings Calendar For The Week Of September 13

Monday (September 13)

IN THE SPOTLIGHT: ORACLE

The world’s largest database management company is expected to report its fiscal first-quarter earnings of $0.97 per share, which represents year-over-year growth of over 4% from $0.93 per share seen in the same period a year ago. The Austin, Texas-based computer technology corporation would post revenue of $9.8 billion.

Oracle’s current low valuation at ~16.7x CY22e EPS reflects its slower growth rate compared to peers. Despite potential opportunities within existing database customers and cloud-based ERP applications, offsets from waning businesses mean 2021 likely lacks the catalysts for the positive inflection in revenue growth investors would need to see to drive multiples higher,” noted Keith Weiss, equity analyst at Morgan Stanley.

“With management guiding to mid-single-digit CC revenue growth in a software sector filled with strong secular growth stories, and operating margins declining in FY22 due to heightened investment in Cloud, we remain Equal-weight while our price target moves up to $77.”

TAKE A LOOK AT OUR EARNINGS CALENDAR FOR THE FULL RELEASES FOR THE SEPTEMBER 13

Ticker Company EPS Forecast
ORCL Oracle $0.97
HRB H&R Block -$0.34

 

Tuesday (September 14)

IN THE SPOTLIGHT: KASPIEN HOLDINGS

Kaspien Holdings, an American company that provides software and services for e-commerce, is expected to report a loss of 47 cents a share revenue of around $39 million in the fiscal second quarter.

U.S. Inflation Data: On September 14, the consumer price index is scheduled to be released. Global trends and inflation data will drive equity markets next week, which after a run of record-breaking trades have taken a breather. If the data continues to be hot, Treasury yields could rise, which would be negative for the market.

“High inflation is also a reason to justify a Fed taper. Headline CPI is likely to remain close to 5.5% year-on-year this week with core inflation remaining at 4.3%. Given ongoing supply issues, rising labour costs and a clear sense of strong corporate pricing power – note the latest Federal Reserve Beige Book stated “several Districts indicated that businesses anticipate significant hikes in their selling prices in the months ahead” – we see little reason for inflation to fall meaningfully before 2Q 2022,” noted James Knightley, Chief International Economist at ING.

“The risk is that rising inflation expectations keeps it higher. Consequently, we continue to look for the Federal Reserve to conduct a swift taper with asset purchases ending in 2Q and interest rates increasing from late 2022 onwards.”

TAKE A LOOK AT OUR EARNINGS CALENDAR FOR THE FULL RELEASES FOR THE SEPTEMBER 14

Ticker Company EPS Forecast
JD Jd Sports Fashion -£3.35

 

Wednesday (September 15)

Ticker Company EPS Forecast
JKS JinkoSolar Holding Co. Ltd. ADR -$1.03
RDW Redrow £0.17

 

Thursday (September 16)

Ticker Company EPS Forecast
AHT Ashtead Group £0.51

 

Friday (September 17)

No major earnings are scheduled for release

The Biggest Risk To Economic Growth. Should You Still Buy The Dip?

In fact, the all-time record for new highs in one year is 77, set in 1995. Trend watchers note that 2021 is only the 11th time since 1928 that the S&P 500 has rallied +20% or more during the first 8 months of the year. In all but the two big market crash years of 1929 and 1987, the S&P 500 managed to hold a solid double-digit gain into year-end, according to Bank of America research.

Bears vs bulls

Bears, however, are quick to point out that the S&P 500 hasn’t had a pullback of at least -5% or more during the entire climb higher this year, something that generally happens about three times a year. Typically, corrections of -5% to -10% are considered healthy. Bears of course believe stocks are wildly overvalued due in large part to the Federal Reserve’s monetary supports and “easy money”. Once the Fed starts reducing its asset purchases and lifting interest rates, bears believe investors will take a more “risk off” attitude and the bull rally in stock markets will correct to some degree.

Overall, bulls seem comfortable with the Fed beginning its asset purchase “taper” later this year and that is partially due to Fed Chair Jerome Powell’s insistence that the economy “still has much ground to cover” before rate hikes are on the table. Bulls are also anticipating a second shot at a “reopening boom” after the current wave of coronavirus has passed. Remember, this wave cut short the Covid-free summer spending surge that everyone had been anticipating so bulls believe this pent-up demand is going to be spent in the quarters ahead.

What to watch?

The biggest risk to economic growth right now is not on the demand side but rather on the supply side as shortages for everything across the board are limiting the amount of goods and services available. Demand amid the summer Covid surge has cooled a bit, which may be a good thing in the long run as it’s given some manufacturers a minute to catch up. And again, bulls believe this is creating just another layer of pent up demand that consumers will satisfy down the road.

Turning to next week, remember that U.S. stock, bond, and commodity markets are closed on Monday, September 6 for the Labor Day holiday. The short week will also be light on data with just the Fed’s Beige Book and July Consumer Credit on Wednesday, and the Producer Price Index on Friday. Next week’s earnings will include Casey’s General Store, Lululemon, GameStop, Oracle, Z-Scaler, Academy Sports, and Kroger to name a few.

SP500 analysis

Sp500 rallied despite weak NFP. There is only one reason for such reaction – the Federal Reserve still cannot move to tighten monetary policy. However, the Cycles forecast the best buying dip opportunity in October if other conditions will be there. We certainly can’t judge now if it is going to be conformed by other tools.

sp500 cycles september 2021

We have bearish ADL divergence on a daily chart and potentially it will play well and create a buying opportunity in October. However, I have to say there is still good accumulation in this market. So, I believe if this market gives a sell signal in September, traders should cash out their positions quite quickly. We are in a strong bull trend and so far all fundamentals still support the stock market.

ES ##-## (Daily) 2021_09_06 (2_51_28 AM)

Weekly Earnings Preview: GameStop, Lululemon Athletica, Oracle and Kroger in Focus

Earnings Calendar For The Week Of September 6

Monday (September 6)

Ticker Company EPS Forecast
DPH Dechra Pharma £47.90
SMAR Smartsheet Inc. -$0.13
SUMO Sumo -$0.14

Tuesday (September 7)

Ticker Company EPS Forecast
CASY Casey’s General Stores $2.99

Wednesday (September 8)

IN THE SPOTLIGHT: GAMESTOP, LULULEMON ATHLETICA

GAMESTOP: The world’s largest multichannel video game retailer is expected to report its fiscal second-quarter loss of -$0.67 per share, an improvement from a loss of -$1.40 per share seen in the same period a year ago.

The Grapevine, Texas-based company would post year-over-year revenue growth of about 20% year-on-year to around $1.1 billion. EPS estimates have been exceeded twice in the last four quarters.

LULULEMON ATHLETICA: The Vancouver-based retailer healthy lifestyle-inspired athletic retailer is expected to report its fiscal second-quarter earnings of $1.18 per share, which represents year-over-year growth of about 60% from $0.74 per share seen in the same period a year ago. The apparel retailer would post year-over-year sales growth of about 50% to $1.34 billion.

Lululemon Athletica (LULU) is a LT topline grower, supported by compelling secular tailwinds (e.g., performance/athleisure focus), a market share gain opportunity, & credible future revenue driver (e.g., international expansion, digital growth, & product innovation/expansion into new categories). The company’s recent MIRROR acquisition offers both revenue & profitability upside, as reflected in our bull case,” noted Kimberly Greenberger, equity analyst at Morgan Stanley.

LULU dominates the NA athletic yoga apparel category due to its unique brand positioning & fashionable products. Covid accelerated consumers health & wellness focus & fashion casualization, both of which should benefit LULU.”

TAKE A LOOK AT OUR EARNINGS CALENDAR FOR THE FULL RELEASES FOR THE SEPTEMBER 8

Ticker Company EPS Forecast
DNLM Dunelm Group £3.00
KFY Korn Ferry International $1.07
CPRT Copart $0.91
GME GameStop -$0.67
RH Restoration Hardware $6.48
ABM ABM Industries $0.81
AVAV AeroVironment -$0.24
LULU Lululemon Athletica $1.18

Thursday (September 9)

IN THE SPOTLIGHT: ORACLE

The world’s largest database management company is expected to report its fiscal first-quarter earnings of $0.97 per share, which represents year-over-year growth of over 4% from $0.93 per share seen in the same period a year ago. The Austin, Texas-based computer technology corporation would post revenue of $9.8 billion.

Oracle‘s current low valuation at ~16.7x CY22e EPS reflects its slower growth rate compared to peers. Despite potential opportunities within existing database customers and cloud-based ERP applications, offsets from waning businesses mean 2021 likely lacks the catalysts for the positive inflection in revenue growth investors would need to see to drive multiples higher,” noted Keith Weiss, equity analyst at Morgan Stanley.

“With management guiding to mid-single-digit CC revenue growth in a software sector filled with strong secular growth stories, and operating margins declining in FY22 due to heightened investment in Cloud, we remain Equal-weight while our price target moves up to $77.”

TAKE A LOOK AT OUR EARNINGS CALENDAR FOR THE FULL RELEASES FOR THE SEPTEMBER 9

Ticker Company EPS Forecast
MRW Morrison Supermarkets £5.77
ASO Avesoro Resources $1.38
VRNT Verint Systems $0.42
FIZZ National Beverage $0.52

Friday (September 10)

IN THE SPOTLIGHT: KROGER

Kroger, one of the world’s largest food retailers, is expected to report its fiscal second-quarter earnings of $0.64 per share, which represents a year-over-year decline of over 12% from $0.73 per share seen in the same period a year ago.

The retailer, which operates over 2,500 supermarkets in the U.S., would post revenue of 30.4 billion, down about -0.3% year on year. However, it is worth noting that in the last four quarters, on average, the company has beaten earnings estimates over 21%.

Best Dividend Stocks August 2021

The hallmark way I go about finding the best dividend stocks…the outliers is by looking for quiet Big Money trading activity. Oftentimes, that can be institutional activity. I’ll go over why following the Big Money is so important in a bit. But, the 5 stocks I see as long-term dividend growth candidates are MA, SHW, WSM, EBAY, & ORCL.

Over decades, I’ve learned that the true tell on great stocks is that big money consistently finds its way into the best companies out there… especially dividend paying stocks. Some of the biggest returns ever have come from holding stocks for many years and reinvesting dividends.

I want the odds on my side when looking for the highest quality dividend stocks…and I own many of them.

So, let’s get into it.

Up first is Mastercard Inc. (MA), which is a large credit card company. They’ve been raising their dividend for years.

Let’s first start with the technical picture.

When deciding on a strong candidate for long-term dividend growth, I look for stocks leading in price:

  • 1-month performance (+7.08%)
  • Historical Big Money buy signals

Below are the Big Money signals Mastercard has made since 2015. Blue bars are showing that MA was seeing big buy activity according to MAPsignals. Typically, the more Big Money signals, the stronger the stock:

Chart, histogramDescription automatically generated
Source: MAPsignals.com

On top of technicals, when deciding on the best dividend stock, you should look under the hood to see if the fundamental picture supports a long-term investment. As you can see, Mastercard has a strong dividend history:

  • 3-year dividend growth rate (+45.7%)
  • Current dividend per share = .44
  • Forward yield = .45%
  • 3-year earnings growth rate (+25.12%)

Next up is Sherwin-Williams Co. (SHW), which is a leading seller of paint materials. They’ve also been a dividend grower for years.

When deciding on a strong candidate for long-term dividend growth, it’s a good idea to look for many years of dividend increases.

Now let’s look at the recent performance:

  • 1-month performance (+4.95%)
  • Historical big money signals

Below are the big money signals that Sherwin-Williams has made since 2015. I expect more buy signals in the years to come.

Chart, histogramDescription automatically generated
Source: MAPsignals.com

On top of technicals, when deciding on the best dividend stock, you should look under the hood to see if the fundamental picture supports a long-term investment. As you can see, Sherwin-Williams has a nice dividend history. Their earnings growth has been stellar as well:

  • 3-year dividend growth rate (+16%)
  • Current dividend per share = .55
  • Forward yield = .77%
  • 3-year earnings growth rate (+11.87%)

Next, I’m looking at Williams-Sonoma, Inc. (WSM), which is a leading home retailer company. They have a solid dividend history.

When deciding on a strong candidate for long-term dividend growth, recent underperformance is not a bad thing:

  • 1-month performance (-1.15%)
  • Historical Big Money signals

Below are the big money signals that Williams-Sonoma has made since 2015. It’s recently showed a Big Money buy signal:

Chart, histogramDescription automatically generated
Source: MAPsignals.com

On top of technicals, when deciding on the best dividend stock, you should look under the hood to see if the fundamental picture supports a long-term investment. As you can see, WSM has a strong dividend history:

  • 3-year dividend growth rate (+9%)
  • Current dividend per share = .59
  • Forward yield = 1.5%
  • 3-year earnings growth rate (+46.58%)

Next, I’m looking at eBay, Inc. (EBAY), which is a leading online auction marketplace. They recently added a dividend.

When deciding on a strong candidate for long-term dividend growth, recent outperformance is great:

  • 1-month performance (+6.86%)
  • Recent Big Money signals

Below are the Big Money signals that eBay has made since 2015.

Chart, histogram

Description automatically generated

On top of technicals, when deciding on the best dividend stock, let’s check up on the fundamentals. As you can see, eBay has recently started paying a dividend.

  • 1-2 year dividend growth rate (+14%)
  • Current dividend per share = .18
  • Forward yield = .98%
  • 3-year earnings growth rate (+130.48%)

Lastly, I’m looking at Oracle Corp. (ORCL), which is a leading enterprise technology company. They’ve been growing their dividend for years.

When deciding on a strong candidate for long-term dividend growth, I like to look for recent leaders:

  • 1-month performance (+12.11%)
  • Recent Big Money signals

Below are the Big Money signals that ORCL has made since 2015.

ChartDescription automatically generated
Source: MAPsignals.com

On top of technicals, when deciding on the best dividend stock, you gotta see if the fundamental picture supports a long-term investment. Oracle has been a steady grower:

  • 3-year dividend growth rate (+11%)
  • Current dividend per share = .32
  • Forward yield = 1.46%
  • 3-year earnings growth rate (+93.1%)

The Bottom Line

MA, SHW, WSM, EBAY, & ORCL represent solid dividend choices. Given the strong historical dividend growth and Big Money signals, these stocks could be worth an extra look for a dividend investor.

Disclosure: the author holds no positions in MA, SHW, WSM, EBAY, & ORCL at the time of filming.

To learn more about the MAPsignals process, click here: www.mapsignals.com

Disclaimer

Oracle Cloud Initiative Could End Uptrend

Oracle Corp. (ORCL) is trading lower by more than 5% in Wednesday’s pre-market after beating fiscal Q4 2021 estimates and lowering Q1 2022 profit guidance. The software giant earned a respectable $1.54 per-share during the quarter, beating estimates by $0.21, while revenue rose 7.5% year-over-year to $11.23 billion, nearly $200 million higher than consensus. Shareholders hit the exits after the company warned it would “roughly double its Cloud CapEx spending in fiscal year 2022 to nearly $4 billion”.

Investing Revenue in Cloud Growth

Cloud computing is more profitable than overall business operations and Oracle is trying to increase market share and improve margins going forward. As a result, it’s “confident that the increased return in the Cloud business more than justifies this increased investment and margins will expand over time”.  However, disappointed investors held a less bullish view, voting with their feet to exit positions.

Success in the new investment is no sure thing because Oracle’s transition into cloud computing has been slower than its rivals, who have already built large and diverse customer bases.. As a result, it will be hard to take market share from Amazon.Com Inc.’s (AMZN) AWS or Microsoft Corp’s (MSFT) Azure in coming quarters, raising doubts about the initiative. In addition, while this high tech venue is growing at a rapid rate, so is competition, with many operations throwing their hats into the ring.

Wall Street and Technical Outlook

Wall Street consensus is skeptical as well, with a ‘Hold’ rating based upon 5 ‘Buy’, 1 ‘Overweight’, and 18 ‘Hold’ recommendations. In addition, three analysts recommend that shareholders close positions and move to the sidelines. Price targets currently range from a low of $60 to a Street-high $115 while the stock is set to open Wednesday’s session about $2 above the median $75 target. This mid-range placement suggests that Oracle is now fully-valued.

Oracle failed a 2019 breakout over the 2017 high at 53.14 during 2020’s pandemic decline and turned higher, breaking out in the fourth quarter. The uptick added more than 40% into early June’s all-time high at 85.03, ahead of a pullback that’s now accelerating to the downside. The decline has settled on the 50-day moving average in the pre-market, generating the first test since February, It’s likely to hold for now but the stock may be headed into months of sideways action.

For a look at all of today’s economic events, check out our economic calendar.

Disclosure: the author held no positions in aforementioned securities at the time of publication. 

Oracle Shares Slump As Earnings Guidance Misses Estimates

Oracle Corporation shares slumped about 5% in extended trading on Tuesday after the world’s largest database management company called for a lower earnings outlook for the fiscal first quarter than equity analysts had previously expected.

The Austin, Texas-based computer technology corporation reported earnings per share of $1.54 per share, beating analysts’ expectations of $1.31 per share. The company’s revenue came in at $11.23 billion, topping the Wall Street consensus estimates of $11.04 billion.

According to CNBC, Oracle CEO Safra Catz called for $0.94 to $0.98 in adjusted earnings per share and 3% to 5% revenue growth in the fiscal first quarter, lower than the market expectations of $1.03 per share.

Oracle Corporation shares slumped about 5% to $77.75 in extended trading on Tuesday. The stock rose over 26% so far this year.

Analyst Comments

“Strong momentum in back-office apps and a pick-up in bookings growth gives management confidence to increase investment ahead of a potential acceleration in revenue growth. However, investors likely need more evidence in the numbers before pushing multiples higher, leaving share range-bound,” noted Keith Weiss, equity analyst at Morgan Stanley.

Oracle Stock Price Forecast

Ten analysts who offered stock ratings for Oracle in the last three months forecast the average price in 12 months of $76.10 with a high forecast of $93.00 and a low forecast of $54.00.

The average price target represents a -6.79% from the last price of $81.64. Of those 10 analysts, two rated “Buy”, eight rated “Hold” while none rated “Sell”, according to Tipranks.

Morgan Stanley raised the stock price forecast to $77 from $73 with a high of $90 under a bull scenario and $58 under the worst-case scenario. The firm gave an “Equal-weight” rating on the database management company’s stock.

Oracle’s current low valuation at ~16.7x CY22e EPS reflects its slower growth rate compared to peers. Despite potential opportunities within existing database customers and cloud-based ERP applications, offsets from waning businesses mean 2021 likely lacks the catalysts for the positive inflection in revenue growth investors would need to see to drive multiples higher,” Morgan Stanley’s Weiss added.

“With management guiding to mid-single-digit CC revenue growth in a software sector filled with strong secular growth stories, and operating margins declining in FY22 due to heightened investment in Cloud, we remain Equal-weight while our price target moves up to $77.”

Several other analysts have also updated their stock outlook. Jefferies assumed coverage with hold rating and raised the target price to $80 from $75. JP Morgan lifted the target price to $77 from $73. Barclays increased the target price to $83 from $80. Piper Sandler increased the target price to $80 from $57.

Check out FX Empire’s earnings calendar

Earnings to Watch Next Week: Oracle, H&R Block, Lennar and Adobe in Focus

Earnings Calendar For The Week Of June 14

Monday (June 14)

Ticker Company EPS Forecast
PDCO Patterson Companies $0.51
EV Eaton Vance $0.92
MIK Michaels Companies $0.30

Tuesday (June 15)

IN THE SPOTLIGHT: ORACLE

ORACLE: The world’s largest database management company is expected to report its fiscal fourth-quarter earnings of $1.31 per share, which represents year-over-year growth of over 9% from $1.20 per share seen in same period a year ago.

The Austin, Texas-based computer technology corporation would post revenue growth of more than 6% to $11.07 billion. In the last four quarters, on average, Oracle has beaten earnings estimates about 6%.

Oracle’s current low valuation at ~14x CY22e EPS reflects its slower growth rate compared to peers. Despite potential opportunities within existing database customers and cloud-based ERP applications, offsets from waning businesses mean 2021 likely lacks the catalysts for the positive inflection in revenue growth investors would need to see to drive multiples higher,” noted Keith Weiss, equity analyst at Morgan Stanley.

“We see 16% EPS growth in FY21 and 6% in FY22, driven by an aggressive pace of share buybacks. However, cc revenue growth is ~2%, in a software sector filled with strong secular growth stories, and just 2% operating income growth points to Oracle potentially reaching peak margins, leaving us Equal-weight at our $73 PT.”

H&R Block: The largest tax provider in the U.S. in terms of offices and revenues is expected to report its fiscal fourth-quarter earnings of $5.07 per share, which represents year-over-year growth of over 68% from $3.01 per share seen in the same period a year ago.

The tax preparation company operating in Canada, the United States, and Australia would post revenue growth of over 32% to around $2.4 billion.

HRB’s core business of assisted tax prep has seen declining volumes over the last 8 years, which we expect to continue this year. We expect the assisted business to remain under pressure given the industry shift toward DIY offerings, with a modest offset from HRB’s own growing DIY business,” noted Jeffrey Goldstein, equity analyst at Morgan Stanley.

“Recent acquisition Wave Financial could be a driver of long-term upside but limited synergies and competitive market makes it hard to prove ROI. HRB generates a high degree of FCF with share buybacks driving double-digit-digit EPS growth in the out years of our model. The stock trades at an attractive normalized FCF yield which suggests the stock could re-rate significantly by improving volumes.”

TAKE A LOOK AT OUR EARNINGS CALENDAR FOR THE FULL RELEASES FOR THE JUNE 15

Ticker Company EPS Forecast
ORCL Oracle $1.31
HRB H&R Block $5.07
AHT Ashtead Group £0.29
HDS HD Supply Holdings $0.34

Wednesday (June 16)

IN THE SPOTLIGHT: LENNAR

The Miami-based home construction company is expected to report its first-quarter earnings of $2.37 per share, which represents year-over-year growth of over 40% from $1.65 per share seen in same period a year ago.

The United States’ leading homebuilders would post revenue growth of about 17% to $6.16 billion.

TAKE A LOOK AT OUR EARNINGS CALENDAR FOR THE FULL RELEASES FOR THE JUNE 16

Ticker Company EPS Forecast
LEN Lennar $2.37
KFY Korn Ferry International $0.98

Thursday (June 17)

IN THE SPOTLIGHT: ADOBE

The U.S. multinational computer software company is expected to report its fiscal second-quarter earnings of $2.81 per share, which represents year-over-year growth of about 15% from $2.45 per share seen in same period a year ago.

The San Jose, California-based software company would post year-over-year revenue growth of over 19% to $3.73 billion.

Adobe has leading market share in some of the most dynamic secular growth areas in software: creative design, dynamic media, and marketing automation. As such, we see the longer-term growth story for ADBE as better than most,” noted Keith Weiss, equity analyst at Morgan Stanley.

“With a large recurring rev base and operating margin improvements expected (as margin pressure from recent acquisitions comes to an end), we expect 20%+ EBIT CAGR from FY20-FY22 and believe this durable growth is not fully reflected in shares. Our $575 PT is based on 41x CY22e EPS of $13.96, which implies ~2.3x PEG on 16% EPS CAGR from FY20-FY22e.”

TAKE A LOOK AT OUR EARNINGS CALENDAR FOR THE FULL RELEASES FOR THE JUNE 17

Ticker Company EPS Forecast
JBL Jabil Circuit $1.04
ADBE Adobe Systems $2.81
KR Kroger $0.98
CMC Commercial Metals $0.84

Friday (June 18)

There are no major earnings scheduled

Why Shares Of Oracle Are Down By 8% Today?

Oracle Video 11.03.21.

Oracle Stock Falls After The Release Of Quarterly Report

Shares of Oracle gained strong downside momentum and are down by 8% in today’s trading session after the company provided its quarterly report.

Oracle reported revenue of $10.1 billion and GAAP EPS of $1.68 per share, beating analyst estimates on both earnings and revenue. The company announced that it increased its quarterly dividend from $0.24 per share to $0.32 per share.

At current levels, the stock yields 2.13%. While this yield is not sufficient enough to attract yield-hunters, the 33.3% increase of the dividend was certainly good news for current shareholders.

In addition to raising the dividend, the company’s Board of Directors increased the share repurchase program by $20 billion.

Interestingly, solid results, higher dividend and the increase of share repurchase program failed to provide support to the stock which found itself under strong pressure after the release of the quarterly report.

What’s Next For Oracle?

Shares of Oracle rallied at the beginning of March on expectations of a strong quarterly report. The report brought good news, but it was not sufficient enough for investors who remained focused on finding high-growth companies.

The stock traded at all-time high levels before the release of the quarterly report, and it looks that the market expected more than a dividend increase and an expansion of the share buyback program.

At the same time, it should be noted that Oracle offers stable growth and reasonable valuation compared to many peers. The stock is trading at less than 15 forward P/E which may attract investors who are searching for cheaper plays in the tech sector.

While the market has generally favored higher-growth, expensive stocks in recent years, the situation may change if Treasury yields continue to move higher and traders start to pay more attention to valuations. In this scenario, shares of Oracle will likely get additional support.

For a look at all of today’s economic events, check out our economic calendar.

Oracle Shares Slump in After-Hours Trading as Cloud Revenue Misses Estimates

Oracle Corporation, the world’s largest database management company, reported a better-than-expected profit in the fiscal third quarter but missed analysts’ estimates for revenue from cloud services and licenses, sending its shares down over 5% in extended trading on Wednesday.

Austin, Texas-based computer technology corporation said its total quarterly revenues were up 3% year-over-year to $10.1 billion, slightly above the Wall Street consensus estimates of $10.07 billion. Non-GAAP net income was up 10% to $3.5 billion, and non-GAAP earnings per share was up 20% to $1.16 per share, beating analysts’ forecasts of $1.11 per share.

However, cloud services and license support revenues were up 5% to $7.25 billion, slightly missing the market expectations of $7.27 billion.

That pushed Oracle shares, which surged more than 20% in 2020, down over 5% to $68.3 in extended trading on Wednesday.

“Shares are down 7% upon results to $67 per share, which we believe is a correction for unfounded exuberance this past year. Despite the market’s reaction, fourth-quarter guidance was better than we expected, which has led us to improve top-line assumptions over the next five years. As a result, we are raising our fair value estimate to $58 per share from $53 per share for narrow-moat Oracle,” said Julie Bhusal Sharma, equity analyst at Morningstar.

Oracle increased the authorization for share repurchases by $20 billion. Oracle also announced that its Board of Directors declared a quarterly cash dividend of $0.32 per share of outstanding common stock, reflecting a 33% increase over the current quarterly dividend of $0.24.

Oracle Stock Price Forecast

Fourteen analysts who offered stock ratings for Oracle in the last three months forecast the average price in 12 months of $72.00 with a high forecast of $82.00 and a low forecast of $57.00.

The average price target represents a -0.17% decrease from the last price of $72.12. Of those 14 analysts, six rated “Buy”, seven rated “Hold” and one rated “Sell”, according to Tipranks.

Morgan Stanley gave the base target price of $73 with a high of $90 under a bull scenario and $48 under the worst-case scenario. The firm gave an “Equal-weight” rating on the computer technology corporation’s stock.

“Strong cloud momentum in back-office applications and database tech still falls short of driving a meaningful acceleration in total revenues. While a low multiple, share repurchases, and a dividend increase keep the value story intact, investors looking for a rebound story are likely disappointed,” said Keith Weiss, equity analyst at Morgan Stanley.

Several other analysts have also updated their stock outlook. Oracle had its price target boosted by stock analysts at Cowen to $77 from $70. The firm presently has an “outperform” rating on the enterprise software provider’s stock. Cowen’s price objective would suggest a potential upside of 7.95% from the company’s previous close. Barclays raised shares to an “overweight” rating from an “equal weight” and lifted their price objective to $80 from $66.

Moreover, Bank of America issued a “neutral” rating and a $68 price objective. Citigroup issued a “neutral” rating and a $65 price objective for the company. Credit Suisse Group raised their target price to $75 from $67 and gave the stock an “outperform” rating.

Analyst Comments

Oracle’s current low valuation at 14x CY22e EPS reflects its slower growth rate compared to peers. Despite potential opportunities within existing database customers and cloud-based ERP applications, offsets from waning businesses mean 2021 likely lacks the catalysts for the positive inflection in revenue growth investors would need to see to drive multiples higher,” Morgan Stanley’s Weiss added.

“We see 16% EPS growth in FY21 and 6% in FY22, driven by an aggressive pace of share buybacks. However, cc revenue growth is 2%, in a software sector filled with strong secular growth stories, and just 2% operating income growth points to Oracle potentially reaching peak margins, leaving us ‘Equal-weight’ at our $73 price target.”

Upside and Downside Risks

Risks to Upside: Stronger adoption of Autonomous Database offering drives positive YoY growth in License revenues. Accelerated adoption of Fusion Apps -highlighted by Morgan Stanley.

Risks to Downside: Disruptive technologies in the data management market. Rapid migration towards the SaaS-based subscription application model hurts near-term optics due to ratable revenue recognition. Strong competition from other secular Cloud application vendors.

Check out FX Empire’s earnings calendar

Earnings to Watch Next Week: MongoDB, Campbell Soup, JD.com and Oracle in Focus

Earnings Calendar For The Week Of March 8

Monday (March 8)

Ticker Company EPS Forecast
PSON Pearson £32.79
CASY Casey’s General Stores $0.95
YQ M17 Entertainment -$0.06
GOCO Gocompare.Com $0.47
DM Dominion Midstream Partners -$0.06
YALA Yalla $0.12

 

Tuesday (March 9)

IN THE SPOTLIGHT: MONGODB

MongoDB Inc, which provides an open-source database platform for automating, monitoring, and deployment backups, is expected to report a loss of $0.39 per share in the fourth quarter, which represents a year-over-year decline of 56% from -$0.25 per share seen in the same quarter a year ago. However, in the last four consecutive quarters, on average, the company has delivered an earnings surprise of over 30%.

New York City-based company would post year-over-year revenue growth of over 27% to $156.97 million.

MongoDB has established itself as one of the most popular databases to support the development of modern net-new apps. Into CY21, we see the business at a crucial inflection point. First, it is poised to garner the majority of revs from its public cloud business – the segment where market growth and share gains are the strongest. Second, the acceleration in customer adds suggests that its go-to-market model has matured to scale a modern, cloud-first business,” said Sanjit Singh, equity analyst at Morgan Stanley.

“As a result, an equation for durable 30%+ growth emerges (20%+ customer base growth with near 120% net-expansion from the existing base) – a growth story that does not look overly demanding given the strategic nature of this asset.”

TAKE A LOOK AT OUR EARNINGS CALENDAR FOR THE FULL RELEASES FOR THE MARCH 9

Ticker Company EPS Forecast
SLA Standard Life Aberdeen PLC £6.04
CMD Cantel Medical Corp $0.51
NAV Navistar International $0.01
DQ Daqo New Energy $1.12
THO Thor Industries $1.57
DKS Dick’s Sporting Goods $2.24
OSH Oak Street Health -$0.23
ABM ABM Industries $0.59
AVAV AeroVironment $0.00
MDB MongoDB Inc -$0.39
HRB H&R Block -$1.19
CLNE Clean Energy Fuels $0.00
ADOOY Adaro Energy ADR $0.05
ITV ITV £5.82

 

Wednesday (March 10)

IN THE SPOTLIGHT: CAMPBELL SOUP

CAMPBELL SOUP: Camden County, New Jersey-based processed food and snack company is expected to report a profit of $0.83 per share in the fiscal second quarter, which represents year-over-year growth of over 15% from $0.72 per share seen in the same quarter a year ago.

In the last four consecutive quarters, on average, the company has delivered an earnings surprise of over 9%. One of the world’s top soup makers would post year-over-year revenue growth of over 6% to $2.3 billion.

“High exposure to secularly challenged soup category: Shelf-stable soup (26.5% of sales) faces headwinds given shifts in preferences toward better-for-you and fresh foods, competition from private label, and pricing pressure. Snacking brands are well-positioned, but face competitive pressures: Milano, Goldfish, Farmhouse, and Snyder’s-Lance have strong brand equity but face high competition from PEP and MDLZ,” said Pamela Kaufman, equity analyst at Morgan Stanley.

“Significant organizational changes over last two years refocused the company and show promise: Divesting non-core businesses and new leadership refreshes the company’s strategic plan, allowing the company to focus on its key segments and geographies.”

TAKE A LOOK AT OUR EARNINGS CALENDAR FOR THE FULL RELEASES FOR THE MARCH 10

Ticker Company EPS Forecast
VERX Vertex Inc. Cl A $0.07
CPB Campbell Soup $0.83
AMC AMC Entertainment -$3.39
SUMO Sumo -$0.12
CLDR Cloudera Inc. $0.11
FNV Franco Nevada $0.70
VNET 21Vianet $0.05
BAK Braskem $1.05
SMTC Semtech $0.48

 

Thursday (March 11)

IN THE SPOTLIGHT: JD.COM, ORACLE

JD.COM: Chinese e-commerce platform JD.com is expected to report a profit of $0.22 in the fourth quarter, which represents year-over-year growth of over 177% from $0.08 per share seen in the same quarter a year ago.

The leading B2C e-commerce player in China, which accounts for over 20% of China’s total B2C online market and over 50% of the online direct sales market, would post year-over-year revenue growth of about 35% to $33.1 billion.

JD’s recent accelerated moves in Community Group Buying business could leverage its advantages in the e-commerce supply chain. Its fast-growing businesses could bring incremental growth momentum into 2021. Maintain Overweight,” said Eddy Wang, equity analyst at Morgan Stanley.

“We forecast that JD’s total revenue will grow 29% YoY in 4Q20, driven by strong demand for electronics and home appliance consumption during promotion season, as well as sustainable strong demand for online FMCG (i.e., JD’s GMV grew 33% YoY during the Double 11 promotion period). Meanwhile, we expect JD to increase its reinvestment to boost consumption in 4Q20, which could drag on its 4Q margin; as such, we forecast that JD’s 4Q20 non-GAAP net margin will reach 0.97% (vs. 0.5% in 4Q19 and 3.19% in 3Q20).”

ORACLE: Austin, Texas-based computer technology corporation is expected to report a profit of $1.11 in the fiscal third quarter, which represents year-over-year growth of over 14% from $0.97 per share seen in the same quarter a year ago.

In the last four consecutive quarters, on average, the company has delivered an earnings surprise of over 5%. One of the largest vendors in the enterprise IT market would post $10.06 billion in sales for the current fiscal quarter, according to Zacks Investment Research. On average, analysts expect that Oracle will report full-year sales of $40.02 billion for the current year, with estimates ranging from $39.44 billion to $40.33 billion.

Oracle’s current low valuation at 13x CY22e EPS reflects its slower growth rate compared to peers. Despite potential opportunities within existing database customers and cloud-based ERP applications, offsets from waning businesses mean 2021 likely lacks the catalysts for the positive inflection in revenue growth investors would need to see to drive multiples higher,” Keith Weiss, equity analyst at Morgan Stanley.

“We see 15% EPS growth in FY21 and 6% in FY22, driven by an aggressive pace of share buybacks. However, cc revenue growth is 2%, in a software sector filled with strong secular growth stories, and just 2% operating income growth points to Oracle potentially reaching peak margins, leaving us Equal-weight at our $67 price target.”

TAKE A LOOK AT OUR EARNINGS CALENDAR FOR THE FULL RELEASES FOR THE MARCH 11

Ticker Company EPS Forecast
JD JD.com $0.22
ULTA Ulta Salon Cosmetics Fragrance $2.18
MTN Vail Resorts $2.03
DOCU DocuSign Inc. $0.22
WPP WPP ADR $2.75
ORCL Oracle $1.11
CELH Celsius $0.03

 

Friday (March 12)

Ticker Company EPS Forecast
SHCAY Sharp ADR $0.08
EBR Centrais Eletricas Brasileiras $0.24

 

Oracle Earnings Beat Wall Street Estimates; Buy with Target Price $64

Oracle, an American multinational computer technology corporation, reported better-than-expected earnings in the second quarter of the fiscal year 2021, largely driven by a surge in sales of software licensing and cloud product due to extended work from home in response to the COVID-19 pandemic.

One of the largest vendors in the enterprise IT market said its net income increased to $2.44 billion, or 80 cents per share, in the quarter ended November 30, up from $2.31 billion, or 69 cents per share, seen in the same period last year.

Excluding items, the company reported EPS of $1.06 per share, beating Wall Street estimate of $1 per share. In addition, total revenues increased 2% to $9.8 billion, beating market expectations of $9.79 billion.

“Oracle reported second-quarter fiscal 2021 results beating CapIQ consensus estimates for revenue and adjusted earnings per share. Notably, on the earnings call, however, was Chairman Larry Ellison’s comments on how Oracle’s supply fell short of demand as a result of Oracle’s lack of capacity in Oracle Cloud Infrastructure, or OCI, which is Oracle’s infrastructure as services, or IaaS, offering,” said Julie Bhusal Sharma, equity analyst at Morningstar.

“While demand for Oracle’s IaaS is encouraging, Oracle’s inability to forecast such demand is not, and we expect overall demand for OCI to still fall short of what demand is for more robust IaaS competitors like AWS and Azure. Considering the quarter’s results and third-quarter outlook roughly in line with our former expectations, we are maintaining our fair value estimate of $53 per share for Oracle. With shares hardly moving around its $60 per share market price after hours, we would recommend waiting for a pullback before committing capital to the wide-moat name,” Sharma added.

Oracle’s shares closed 0.42% lower at $59.48 on Thursday. However, the stock is up over 12% so far this year.

Oracle Stock Price Forecast

Fourteen equity analysts forecast the average price in 12 months at $64.75 with a high forecast of $71.00 and a low forecast of $57.00. The average price target represents an 8.86% increase from the last price of $59.48. From those 14 analysts, four rated “Buy”, ten rated “Hold” and none “Sell”, according to Tipranks.

Morgan Stanley gave the base target price of $67 with a high of $84 under a bull-case scenario and $45 under the worst-case scenario. The firm currently has an “Equal-weight” rating on the multinational computer technology corporation’s stock.

“Our new price target of $67 is based on a 14x multiple applied to our CY22 EPS estimate of $4.83. Our old price target of $62 was based on 14x multiple applied to our prior $4.51 CY21 EPS estimate,” said Keith Weiss, equity analyst at Morgan Stanley.

Several other analysts have also upgraded their stock outlook. Barclays raised the stock price forecast to $66 from $62; RBC upped the target price to $71 from $68; Piper Sandler increased the price objective to $57 from $50; JP Morgan raised the price target to $68 from $61; Credit Suisse upped the target price to $67 from $66.

Analyst Comments

“Oracle’s current low valuation at 13x CY22e EPS reflects its slower growth rate compared to peers. Despite potential opportunities within existing database customers and cloud-based ERP applications, offsets from waning businesses mean 2021 likely lacks the catalysts for the positive inflection in revenue growth investors would need to see to drive multiples higher,” Morgan Stanley’s Weiss.

“We see 15% EPS growth in FY21 and 6% in FY22, driven by an aggressive pace of share buybacks. However, cc revenue growth is 2%, in a software sector filled with strong secular growth stories, and just 2% operating income growth points to Oracle potentially reaching peak margins, leaving us Equal weight at our $67 price target.”

Upside and Downside Risks

Risks to Upside: 1) Stronger adoption of Autonomous Database offering drives positive YoY growth in License revenues. 2) Accelerated adoption of Fusion Apps – highlighted by Morgan Stanley.

Risks to Downside: 1) Disruptive technologies in the data management market. 2) Rapid migration towards SaaS-based subscription application model hurts near-term optics due to ratable revenue recognition. 3) Strong competition from other secular Cloud application vendors.

Check out FX Empire’s earnings calendar

Anticipation Builds Ahead Of Microsoft Earnings

Dow component Microsoft Corp. (MSFT) reports fiscal Q1 2021 earnings on Oct. 27, with analysts expecting a profit of $1.36 per-share on $35.8 billion in revenue. The stock sold off more than 6% after the Q4 release in July, despite beating top and bottom line estimates. Market watchers blamed the sell-the-news reaction on overly-high expectations for the cloud and commercial products divisions. The stock recovered those losses into August and posted an all-time high in early September.

Microsoft And TikTok

Buying pressure resumed after Mr. Softee threw its hat into the ring in the TikTok drama, seeking to acquire the company while jumping through political hoops in China and the United States. Oracle Inc. (ORCL) eventually won the coveted prize but continued conflict between nations suggests that Microsoft was lucky to walk away empty-handed and redirect attention to core services and the Nov. 10 release of the next-generation Xbox console.

Morgan Stanley analyst Keith Weiss discussed the revenue boost expected from the Xbox release earlier this month, stating, “The fiscal year 2021 console cycle and the addition of Bethesda highlight incremental growth opportunities for Microsoft’s gaming franchise, w/ a potential ~$80 billion value for the gaming subscription biz alone. Our bottom up work suggests the console cycle should not derail a broader margin expansion story. Overweight.”

Wall Street And Technical Outlook

Wall Street has been bullish on the big tech powerhouse for years, with a current ‘Moderate Buy’ consensus based upon 23 ‘Buy’ and 3 ‘Hold’ recommendations. No analysts are recommending that shareholders close positions and move to the sidelines at this time. Price targets currently range from a low of $208 to a Street-high $260 while the stock is set to open Monday’s U.S. session about $16 below the median target. There’s plenty of potential upside after a strong strong quarterly report, given this humble placement.

Microsoft broke out above the first quarter high at 190.65 in June and added more than 40 points into the September peak. It then sold off with broad benchmarks, testing the 50-day moving average for more than 5 weeks before surging off a small base earlier this month. Accumulation readings are hovering near new highs, supporting continued upside, but monthly cycles are flashing overbought technical readings. This conflict suggests two-sided action through most or all of the fourth quarter.

For a look at all of today’s economic events, check out our economic calendar.

ORACLE: The TikTok Battle

National security

Such is the case of TikTok. To young performers, it is known as an app where you share your creative ads dancing or doing anything else that may keep the attention of a multimillion audience for several minutes.

To the US security and intelligence, it is known as a Chinese data and social networking company that threatens to tap into the sovereign territory of the US social data. Roughly, that is the concern that made the administration of the US President impose the September-15 deadline for selling the US operations of TikTok to an American company.

Two contenders

Previously, Microsoft used to the main company in focus to continue TikTok’s US operations. However, the negotiations with this potential buyer went aside as Oracle took over the stage, and the people around the issue are pointing to the fact that the deal is very possible. But this is not the only thing people are pointing out: Oracle has been financially supporting Donald Trump’s campaigns and has been more than just cooperative with the US President until now.

So we have an international business, the US-China relations, and the US elections all in one knot around Oracle now. With all this in view, stocks of Oracle may soar in case the deal is successfully sealed: not because there are a lot of truly positive business outcomes from it, but because of the heightened degree of discussions around the matter.

Technical view

On the daily chart, the recent spike that still ended up below the previous high corresponds to the announcement that Oracle is likely to take over the race over TikTok from Microsoft. The bearish ending is logical for that bar because there is no deal signed yet, and in the end, what we have is just talks and negotiations. In the meantime, the deadline of September 15 is nearing – that means, even if we don’t see another bullish spike, there will be increased volatility in any case. In the end, it falls well into the equilateral upward channel Oracle’s stock has been in since March. Expect $56 to provide firm support while $62 may be the objective for bulls in the most aggressively bullish scenario. Otherwise, the area of $58-59 seems a fair target range for Oracle stock in the short term.

This post is written and submitted by FBS Markets for informational purposes only. In no way shall it be interpreted or construed to create any warranties of any kind, including an offer to buy or sell any currencies or other instruments. 

The views and ideas shared in this article are deemed reliable and based on the most up-to-date and trustworthy sources. However, the company does not take any responsibility for accuracy and completeness of the information, and the views expressed in the article may be subject to change without prior notice. 

Asia-Pacific Shares Higher Across the Board; Japan’s SoftBank Jumps More than 10%

The major Asia-Pacific stock indexes are trading higher on Monday, boosted by hopes of a coronavirus vaccine, acquisition news and politics. However, sentiment remained cautious ahead of a big week of central bank meetings in the U.K., Japan and the United States.

In the cash market on Monday, Japan’s Nikkei 225 Index is trading 23542.51, up 136.02 or +0.58%. South Korea’s KOSPI Index is at 2424.14, up 27.45 or +1.15% and Hong Kong’s Hang Seng Index is at 24667.61, up 164.30 or +0.67%.

In China, the Shanghai Index is trading 3267.13, up 6.78 or +0.21% and Australia’s S&P/ASX 200 Index is at 5879.30, up 19.90 or +0.34%.

Coronavirus Vaccine Hopes Rekindled as AstraZeneca Resumes Phase-3 Trial

AstraZeneca said on the weekend it has resumed British clinical trials of its COVID-19 vaccine, one of the most advanced in development, after getting the green light from safety watchdogs.

The late-stage trials of the experimental vaccine, developed with researchers from the University of Oxford, were suspended last week after an illness in a study subject in Britain, casting doubts on an early rollout.

A vaccine has long been awaited to help pull the world out of a coronavirus-induced lockdown. Friday marked six months since the World Health Organization (WHO) declared the coronavirus a pandemic on March 11.

Nvidia to Buy Chip Designer Arm for $40 Billion as SoftBank Exits

Nvidia will buy UK-based chip designer Arm from Japan’s SoftBank Group Corp for as much as $40 billion, the companies said on Monday, in a deal set to reshape the global semiconductor landscape.

Nvidia will pay SoftBank $21.5 billion in shares and $12 billion in cash, including $2 billion on signing. The deal will see SoftBank and its $100 billion Vision Fund, which has a 25% in Arm, take a stake in Nvidia of between 6.7% and 8.1%.

Shares of Japan’s SoftBank Group soared 10.26% in Monday afternoon trading.

Japan’s Suga Poised to Win Party Race, Headed for Premiership

Japanese Chief Cabinet Secretary Yoshihide Suga, a longtime loyal aide of outgoing Prime Minister Shinzo Abe, was poised to win a ruling party leadership election on Monday, virtually ensuring that he replaces Abe this week in the nation’s top job.

Suga, who has said he would pursue Abe’s key economic and foreign policies, is expected to get the bulk of votes from 394 Liberal Democratic Party (LDP) lawmakers and is likely to win a majority of 141 votes from the party’s local chapters.

Suga was on track to win over 70% of the MP’s votes and was leading among local chapters, public broadcaster NHK reported.

China Stocks Rise as STAR Market Shines on Regulatory Nod to Launch ETFs

Chinese shares rose on Monday, with Shanghai’s NASDAQ-style STAR Market leading gains after securities regulator approved the first batch of exchange-traded funds (ETFs), which are expected to draw fresh funds into the market.

Financial sector climbed up marginally after China issued new rules on Sunday to regulate financial holding companies, in its latest move to prevent systematic risks to the nation’s vast financial sector.

In other news, sources told Reuters that ByteDance abandoned the sale of TikTok in the United States on Sunday in pursuit of a partnership with Oracle Corp that it hopes will spare it a U.S. ban while appeasing China’s government.

For a look at all of today’s economic events, check out our economic calendar.

TikTok to Pursue Partnership with Oracle; Microsoft Proposal Rejected

ByteDance abandoned the sale of TikTok in the United States on Sunday in pursuit of a partnership with Oracle Corp that it hopes will spare it a U.S. ban while appeasing China’s government, people familiar with the matter told Reuters. The decision between TikTok and Oracle to become business partners in the United States is expected to satisfy the Trump administration’s national security concerns.

The White House had imposed a September 20 deadline for ByteDance to announce a plan for a sale of TikTok in the U.S. or be banned by September 29, and a deal would have to be done by November 12.

Microsoft Bows Out of Deal to Buy TikTok

Meanwhile, Microsoft said Sunday that ByteDance had chosen not to sell it TikTok’s U.S. assets.

The exact nature of the agreement between TikTok and Oracle remains unclear, but it was not described as an outright sale. The news about Oracle came just after Microsoft announced that it will not buy TikTok’s U.S. operations from ByteDance.

“We are confident out proposal would have been good for TikTok’s users, while protecting national security interests,” Microsoft said in a blog post Sunday. “To do this, we would have made significant changes to ensure the service met the highest standards for security, privacy, online safety, and combatting disinformation, and we made these principles clear in our August statement.”

Multiple analysts had described Microsoft’s pursuit of TikTok as a potential “coup” for the Washington state-based firm – an opportunity to scoop up one of the world’s fastest growing social media platforms at a time when TikTok may be desperate to make a deal.

According to CNBC, “Microsoft’s failure to buy TikTok amounts to a symbolic loss for Satya Nadella, who took over Microsoft from Steve Ballmer in 2014. Under Ballmer, Microsoft had sought to buy Yahoo in 2008 but ultimately withdrew the bid after Yahoo rejected the offer, even as Microsoft increased the amount it was willing to pay.”

Walmart May Still Has an Interest in TikTok

A deal could have also included an American retail giant:  Walmart was also participating in negotiations with Microsoft over a potential deal. The retailer had said it was interested in how TikTok could have bolstered its access to consumers.

Walmart on Sunday told CNN Business that it “continues to have an interest in a TikTok investment and continues discussions with ByteDance leadership and other interested parties.”

“We know that any approved deal must satisfy all regulatory and national security concerns,” the company said in a statement.

ByteDance has not responded to a request for comment. TikTok declined to comment and Oracle did not respond to a request for comment.

For a look at all of today’s economic events, check out our economic calendar.

Oracle Q2 Revenue Jumps on Growing Demand for Cloud Services, License Support; Target Price $65

Oracle Corporation, an American multinational computer technology company, reported a 2% increase in total revenues in the second quarter, largely driven by demand for cloud services and license support, which accounted for 74% of the company’s total revenue, amid COIVD-19 pandemic, sending its shares up about 5% in pre-market trading on Friday.

The database giant said its revenue from its largest unit, that includes its cloud services, rose 2.1% to $6.95 billion. Total revenue rose 1.6% to $9.37 billion. The company’s net income rose to $2.25 billion, or 72 cents per share, in the first quarter ended August 31, from $2.14 billion, or 63 cents per share, a year earlier.

“With management citing very strong Database bookings/backlog following a major release in 4Q, the prospect of a new product cycle is back, which would fuel a major new growth engine. Maintain Outperform. Raise price target to $70,” said J. Derrick Wood, equity analyst at Cowen.

Zscaler’s shares jumped about 5% to $60.09 in pre-market trading on Friday; the stock is up over 8% so far this year.

Executive comments

“Q1 was fantastic with total revenue beating guidance by more than $150 million, and non-GAAP earnings per share beating guidance by $0.07,” said Oracle CEO, Safra Catz.

“Our cloud applications businesses continued their rapid revenue growth with Fusion ERP up 33% and NetSuite ERP up 23%. We now have 7,300 Fusion ERP customers and 23,000 NetSuite ERP customers in the Oracle Cloud. Our infrastructure businesses are also growing rapidly as revenue from Zoom more than doubled from Q4 last year to Q1 in this year. I have a high level of confidence that our revenue will accelerate as we move on past COVID-19.”

Oracle stock forecast

Twenty-one analysts forecast the average price in 12 months at $58.17 with a high forecast of $69.00 and a low forecast of $41.00. The average price target represents a 1.47% increase from the last price of $57.33. From those 21 equity analysts, six rated “Buy”, 14 rated “Hold” and one rated “Sell”, according to Tipranks.

Morgan Stanley gave a target price of $62 with a high of $77 under a bull-case scenario and $40 under the worst-case scenario. Stifel raised their stock price forecast to $56 from $48 and Wells Fargo upped their price target to $68.75 from $62.5.

Other equity analysts also recently updated their stock outlook. Barclays raised price target to $59 from $52, Cowen and Company increased their stock price forecast to $70 from $60, Evercore ISI raised target price to $65 from $55, Citigroup upped their price target to $61 from $54, Jefferies raised target price to $65 from $55, RBC increased their target price to $60 from $51 and Credit Suisse increased their price objective to $66 from $62.

We think it is good to buy at the current level and target $65 as 100-day Moving Average and 100-200-day MACD Oscillator signal a strong buying opportunity.

Analyst views

“Oracle’s current low valuation at ~13x CY21e EPS reflects its slower growth rate compared to peers. Despite potential opportunities within existing database customers and cloud-based ERP applications, offsets from waning businesses mean 2021 likely lacks the catalysts for the positive inflection in revenue growth investors would need to see to drive multiples higher,” said Keith Weiss, equity analyst at Morgan Stanley.

“We see 11% EPS growth in FY21 and 9% in FY22, driven by an aggressive pace of share buybacks. However, cc revenue growth is 2%, in a software sector filled with strong secular growth stories, and just 2% operating income growth points to Oracle potentially reaching peak margins, leaving us Equal-weight at our $62 price target,” Weiss added.

Upside and Downside Risks

Upside: 1) Stronger adoption of Autonomous Database offering drives positive YoY growth in License revenues. 2) Accelerated adoption of Fusion Apps – highlighted by Morgan Stanley.

Downside: 1) Disruptive technologies in the data management market. 2) Rapid migration towards SaaS-based subscription application model hurts near-term optics due to ratable revenue recognition. 3) Strong competition from other secular Cloud application vendors.

Check out FX Empire’s earnings calendar

Oracle Revenue Hit by Coronavirus Outbreak, Misses Fiscal Q4 Estimates

Oracle Corporation, an American multinational computer technology company, missed Wall Street’s revenue targets in the fourth-quarter as clients in retail industries and hospitality have either cancelled or postponed purchases in the wake of the coronavirus pandemic.

Database giant, Oracle, reported a net income of $3.11 billion for the last quarter of the fiscal year 2019-20, or 99 cents per share, down from $1.07 per share seen in the same period a year ago. Revenue dipped over 6% to $10.44 billion, missing the analysts’ prediction of $10.61 billion, down from $11.14 billion in the same quarter year ago.

Adjusted earnings were reported at $1.20 per share, again down from $1.16 per share seen a year ago. That is close to Oracle’s lower bound of March prediction of $1.20 to $1.28 per share on revenue of $10.92-$11.36 billion.

“Our overall business did remarkably well considering the pandemic, but our results would have been even better except for customers in the hardest-hit industries that we serve such as hospitality, retail, and transportation postponing some of their purchases,” chief executive officer, Safra Catz said in the statement.

Most of the customers in the business have postponed orders as the COVID-19 brought the global economy to a near-standstill affecting day-to-day business and demand. Some of the companies competing with Oracle have flagged the same ongoing problems, affecting its yearly outlook.

Oracle, which is making an aggressive push for its diversified software solutions and integrated cloud computing services, posted a quarterly sale of $6.85 billion, missing the forecast of $6.98 billion, including business from Oracle Cloud.
The company also reported a massive drop of 22% to $1.96 billion in revenue from on-premise license and cloud license, missing market consensus of $2.11 billion.

It is worth noting the company did not publish a numerical target for fiscal year 2020-21.

“We are now at a point where our growing businesses are now larger than our declining businesses and this favorable shift will inevitably drive revenue acceleration going forward,” said Chief Executive Safra Catz on a conference call with analysts Tuesday, reported by MarketWatch.

After the earnings release, Oracle shares slumped more than 4%, but later recovered all of its losses ad closed +2.5% at $54.59. The stock price has gained about 40% from the March’s low of $39.74 and recouped all of its coronavirus-induced losses, gaining over 3% so far this year.

According to Tipranks, 16 analysts forecast the average price in 12 months at $54.90 with a high of $60.00 and a low of $50.00. The average price target represents a 0.57% increase from the last price of $54.59.

It is good to buy at the current level as 20-day Moving Average and 100-day Moving Average signals a ‘buy’ opportunity; target $56 in the near-term with a stop loss of around $52.

Alphabet Inc (Google) Is Pursuing the Pentagon’s Giant Cloud Contract Quietly, Fearing An Employee Revolt

Google leaders used the two meetings and described the way in which company’s transition cloud computing as well as how it has been positioning itself as a powerhouse for research and development of artificial intelligence. In particular, the company’s founder was keen on showcasing how they were about AI every day and how they intend to implement cloud. This is according to one former and one current senior official from the Defense Department.

According to the officials, who spoke on condition of anonymity, this was not an overt sales pitch as such. However, the effect of the trip was transformative for the company. During the trip, Mattis also met a number of representatives from Amazon.com, Inc. (NASDAQ:AMZN). Mattis went west with a lot of reservations concerning the department’s shift to cloud and by the time he returned to Washington, he was fully convinced that the military needed to import a big portion of its data to a commercial provider of the cloud. The move would go beyond just managing emails, files or paperwork.

In September last year, officials from the Defense Department announced that the department would be moving into a cloud on a large scale. The Joint Enterprise Defense Infrastructure, or JEDI, the program has since been combined into a single contract and is worth $10 billion over a decade and will be awarded by the end of this year.

The competition for the contract is still in its early stages and the department is expected to announce the request for proposals any time this week. However, according to officials from the department, the race is shaping up into a three-horse race between Google, Microsoft Corporation (NASDAQ:MSFT) and Amazon. Oracle Corporation (NYSE:ORCL) comes in a distant fourth among the companies eying the deal. Although Microsoft and Amazon have been active participants in many events that are related to the deal, including an industry event which happened on March 7, Google has kept its interests in the deal away from the media and out the public gallery. The company’s management is even working hard to ensure that the details of their interest in the deal are kept away from its own employees.

The company has not responded to any comments regarding their interest in the JEDI deal. Google’s spokesperson in charge of cloud business recently said that they had secured the FedRAMP certification, which clears the company to compete for government contracts. Officials from Pentagon expect those who will lose the contract to protest so public conversation is being limited in a bid to reduce perceptions of favoritism. According to reports from several officials, Mattis is not concerned so much about who wins the contract. He has appointed Deputy Defense Secretary Patrick Shanahan to manage the entire process.  According to the officials, Mattis prefers the JEDI cloud to be secure and resilient and must be able to deliver any needed information fighters in combat. He also prefers a cloud that will not take long to build.