In fact, they didn't give one reason to own the stock -- they gave five reasons. Speaking on CNBC's "Mad Dash" segment, TheStreet's Jim Cramer decided to give the note a closer look.
While boosting his price target from $50 to $57, analyst Keith Weiss made several arguments in favor of Oracle, including:
- A "full swing" database business
- Reset expectations for software-as-a-service applications
- A lower tax rate
- Repatriation of overseas cash
- Lower valuation vs. its historical average
Based on comments from CEO Mark Hurd, it appears that Wall Street overreacted to Oracle's previous earnings report, Cramer said. It wasn't nearly as bad as investors made it seem, he added.
Perhaps Oracle's cloud business is improving. But even if that's not the case, the stock is very cheap, trading at just 15 times forward earnings. Oracle stock was trading in the low-$50s over the summer. Now though, even with the new tax bill and the ability to repatriate overseas cash, Oracle stock is trading in the mid- to upper-$40s, he noted.
Will the company bring back cash to buyback stock? Oracle very well could, reasoned Cramer, who also manages the Action Alerts PLUS charitable trust portfolio.
Databases are in full swing and that's very good news for Oracle. But what else is in full swing? Mainframes, which is good news for International Business Machines (IBM - Get Report) . While Morgan Stanley analysts were bulled up on Oracle, RBC Capital analysts turned bullish on IBM. Analysts boosted IBM to outperform from sector perform and raised their price target to $180 from $160. Valuation was also a catalyst for the analysts.
- Warren Buffett Should Be Ignored When It Comes to IBM's Stock
- Intel Faces New Threats From IBM and Qualcomm, Even As It Fends Off AMD
- Oracle Is Once More Turning to M&A to Boost Flagging Growth
"I'm in love with the mainframe cycle because the margins are big," Cramer said, adding that he's surprised investors weren't more bullish about the catalyst. However, Warren Buffett, a huge IBM investor, had been selling throughout 2017 and that seemed to trump everything else. Instead though, Buffett was a big buyer of Apple (AAPL - Get Report) .
If IBM can deliver good results, the stock could be a coiled spring, Cramer concluded.
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