Oracle Corporation (ORCL)

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Why Oracle Stock Is Up By 15% Today
By: Vladimir Zernov | December 10, 2021

• The stock made an attempt to settle above $105.

Oracle Stock Rallies As Quarterly Report Exceeds Analyst Estimates

Shares of Oracle gained strong upside momentum after the company released its quarterly report. Oracle reported revenue of $10.4 billion and adjusted earnigns of $1.21 per share, beating analyst estimates on both earnings and revenue.

Oracle stated that the board of directors increased the share buyback program by $10 billion, which will provide additional support to the company’s shares.

In the next quarter, Oracle expects to report adjusted earnings of $1.14 – $1.18 per share, in line with the analyst consensus. The company plans to grow its revenue by 3% – 5%.

In the earnings press release, Oracle highlighted growth opportunities for its cloud infrastructure business. The market clearly agrees with the company, sending its shares above the $100 level after the release of the earnings report.

What’s Next For Oracle Stock?

Currently, analysts expect that Oracle will report earnings of $4.7 per share in the current year and $5.16 per share in the next year, so the stock is trading at roughly 20 forward P/E, which looks relatively cheap in the current market environment.

Analysts rushed to update their price targets after the strong quarterly report, providing additional support to the stock. The expansion of the buyback program will serve as a longer-term positive catalyst.

Demand for tech stocks remains strong, which is bullish for Oracle. It remains to be seen whether this demand will stay strong when the Fed starts raising rates in 2022, but Oracle’s reasonable valuation should provide some support in case of a sell-off in the tech segment.

In the near term, Oracle stock may face a temporary pullback due to profit-taking. However, the fundamental story remains strong while valuation is attractive compared to many alternatives in the tech space, so Oracle stock has a decent chance to gain sustainable upside momentum in the upcoming weeks.

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