Oracle Stock Forecast: This market looks bad, but ORCL looks good

Oracle (ORCL) stock has rallied 12% to $71.73 on Tuesday morning before the market officially opens as the enterprise software leader beat expectations on top and bottom lines. The Silicon Valley forerunner of so many software as a service (Saas) firms posted results for the quarter ending in March of $1.54 in adjusted earnings per share (EPS) and revenue of $11.84 million. The EPS figure beat Wall Street forecasts by 16 cents, and revenue topped expectations by $190 million. The overall market may be tanking, but it is all rainbows and roses from Oracle's standpoint.

Also read: Nvidia Stock Deep Dive Analysis: NVDA price target at $205 with strong revenue growth

Oracle Stock Earnings News: Solid forward guidance

Cloud revenues rose 22% YoY, and management said new sales showed that demand remained high. Cloud services only advanced 3% YoY however, and hardware sales dropped 3%. Overall, Oracle produced flat adjusted EPS YoY, but revenue grew 5.5%.

Oracle management sees revenue rising as much as 18% in the new fiscal year (April 2022 through March 2023), especially due to Oracle's recent buyout of medical records software provider Cerner. The acquisition cost over $28 billion, but Oracle views the acquisition as a way to move into the overall healthcare sector. Most of Oracle's offerings at present deal with enterprise resource management, manufacturing and procurement platforms, and database services.

During Monday's conference call, CEO Safra Catz expounded: "Our fundamental principle is to grow EPS while accelerating cloud revenue growth. [...] Given our increasing confidence in organic revenue growth, we will continue to prudently invest back in the business, and you can already see the returns in our performance." Catz said results would have been even better, but currency headwinds cost the company 5%, which was much higher than the usual 2%.

The US dollar has strengthened over the first half of this year and during the quarter. "What [fiscal] Q4 demonstrates is that our business is accelerating. A growing list of customers, many new to Oracle, are choosing us for more products and services as they understand the benefits of Oracle technology," Catz said.

Oracle Stock Forecast: Nearing a test of downtrend upper boundary

ORCL stock has been in a downtrend since October 25 despite an unusual spike in mid-December before shares dropped back into the downward trending price structure. At the moment the top and bottom lines of the price channel are at $57 and $76. The premarket price first needs to retake the June 6 at $74.79, but it appears there is already resistance at $72.

Above the June 6 high, bulls need to push their away out of the downward trending price channel at $76 in order to drive much more of a rally. Support is at $67 and $63.

ORCL 4-hour chart

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