Oracle Tests the Limit

Shares of Oracle(ORCL - Cramer's Take - Stockpickr) took a beating in early December when Lehman Brothers published a note forecasting weakness in the company's core database business.

But like that annoying bunny of TV fame, Oracle keeps on ticking and appears headed for a third strong quarter in a row when it reports second-quarter earnings late Monday.

And even the Lehman-inspired dip hasn't done much to hurt the stock's annual performance; it's up about 45% since the beginning of the year, while the Nasdaq and Goldman Sachs Software Index have gained just 10% and 11%, respectively. Bitter rival SAP(SAP - Cramer's Take - Stockpickr), meanwhile, has gained just 15% this year.

Indeed, Standard & Poor's analyst Zaineb Bokhari said the recent weakness creates a buying opportunity, and on Thursday she bumped her rating on Oracle to strong buy from buy. "With the shares trading at a 23% discount to peers based on P/E, we view them as compelling," she wrote.

Most other analysts, though, don't see a lot of headroom in the stock at the moment. The consensus target price, according to Thomson First Call, is $19.76, not far above Friday's close of $17.68. The stock had climbed to a 52-week high of $19.75 in late November.

By and large, Wall Street is expecting a strong quarter that will generally be in line with expectations. The consensus estimate calls for a profit of 22 cents a share, excluding the cost of options, on total revenue of $4.15 billion. A year ago, Oracle posted non-GAAP earnings of 19 cents a share on sales of $3.3 billion.