Oracle (ORCL) Stock Higher, Upgraded at BMO Capital

Oracle (ORCL) stock was upgraded to 'outperform' at BMO Capital given 'higher conviction' that it can meet the firm's and consensus estimates.
By Rachel Graf ,

NEW YORK (TheStreet) -- Shares of Oracle (ORCL) - Get Report are up 1.20% to $41.27 in pre-market trading on Tuesday after BMO Capital Markets upgraded the stock to 'outperform' from 'market perform' in a note released earlier today.

The firm hiked its price target to $47 from $45 on shares of the cloud applications provider.

The higher rating reflects the firm's belief that Oracle will meet its and consensus estimates and generate growth in operating income. 

"Given stable to higher operating margins, combined with 2% to 3% revenue growth, we believe that operating income will grow by 3.6% in fiscal year 2017 and 3.9% in fiscal year 2018," BMO Capital said.

As Oracle grows operating income, its multiple will expand as well, the firm added.

BMO Capital thinks its maintenance estimates are "reasonable," and Oracle will "continue to be aggressive with total shareholder capital allocation" without any big M&A transactions.

Separately, TheStreet Ratings team rates the stock as a "buy" with a ratings score of B+.

Oracle's strengths such as its increase in net income, reasonable valuation levels, expanding profit margins, largely solid financial position with reasonable debt levels by most measures and solid stock price performance outweigh the fact that the company shows weak operating cash flow.

You can view the full analysis from the report here: ORC

TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this article's author. 

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