Shares of computer software company Oracle Corp. (ORCL) lost 1.7% in extended trade on Monday after it reported mixed results for the first quarter of Fiscal Year 2022.
The company reported adjusted earnings per share of $1.03, beating the analysts’ expectations of $0.97. The figure compares favorably with earnings of $0.93 per share reported in the year-ago period.
Total revenues came in at $9.7 billion, up 4% from $9.4 billion. However, it lagged analysts’ expectations of $9.77 billion. The company’s cloud services and license support revenue, which accounted for 76% of the total revenue, rose 6% year-over-year to over $7.4 billion. (See Oracle stock charts on TipRanks)
The CEO of Oracle, Safra Catz, said, “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… As these two cloud businesses continue to grow they will help expand our overall profit margins and push earnings per share higher.”
Following the release, Oppenheimer analyst Ray McDonough assigned a Hold rating to the stock.
“The combination of durable back-office cloud application growth, continued momentum with OCI/ autonomous database (consumption revenue +80% y/y) and stability in database subscription revenue (+6% y/y) give us confidence in Oracle’s ability to drive a sustainable re-acceleration of revenue growth in FY22 and beyond,” McDonough said.
Based on 4 Buys, 13 Holds and 2 Sells, the stock has a Moderate Buy consensus rating. The average Oracle price target of $84.7 implies 4.7% downside potential from current levels.
ORCL scores an 8 out of 10 on TipRanks’ Smart Score rating system, suggesting that the stock is likely to outperform market averages.