Consensus estimates call for Oracle to post earnings of 68 cents a share on revenue of $9.51 billion for its fiscal second quarter, according to Thomson Reuters. Oracle had forecast quarterly earnings in the range of 66 cents to 70 cents a share, according to analysts.
Oracle's longtime CEO Larry Ellison passed the reins in September to former HP (HPQ) CEO Mark Hurd and Safra Catz -- announced in conjunction with last quarter's results. Ellison remains the company's executive chairman and CTO.
Oracle shares were trading down 0.36% on Tuesday to $40.96. The stock is up 7.5% this year. Here's what analysts said about Oracle's second quarter"
Jack Andrews, D.A. Davidson (Buy, $47 PT)
Investor attention to remain focused on Cloud revenue segments. The company has recently been emphasizing its strength in the Cloud, and began dividing its Cloud Subscriptions segment into Cloud SaaS (software as a service) & PaaS (platform as a service) and Cloud IaaS (infrastructure as a service) in FY4Q14. For FY2Q15, we model Cloud SaaS & PaaS revenue to grow 43.0% YoY to $370 million and Cloud IaaS to grow 43.0% to $139 million. We believe share price volatility may increase as investors become hyper focused on the directional trends of these individual line items, even though we model the combined Cloud offerings comprising only 5.3% of total FY2Q15 revenue.
We are forecasting non-GAAP EPS of $0.68, previously $0.69, which compares with $0.69 in FY2Q14 and is in line with the Street mean of $0.68. Company guidance is $0.66-$0.70. For FY2015, we forecast $3.05 in non-GAAP EPS while the Street consensus is at $3.04. We note that ORCL's financial results have either missed or come in at the low end of management's guidance range in 6 of the last 8 quarters.
Our thesis remains sentiment in ORCL will gradually improve. In the near term, we believe the potential for continued choppy execution around the transition to the cloud and negative currency impacts are more widely understood. From a longer term perspective, we believe the probability of the extreme bear case on ORCL being realized (i.e. a secular decliner) should decline as a result of the numerous cloud product introductions at OpenWorld. The potential magnitude of the extreme bull case on ORCL (i.e. capturing a greater share of enterprise IT spending) is less clear at this juncture; however, we note that ORCL's valuation discount on a P/E basis to the S&P 500 is nearing historic highs.