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Oracle Corp ORCL

Rating as of

Morningstar’s Analysis

Valuation
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1-Star Price

PREMIUM

5-Star Price

PREMIUM

Economic Moat

PREMIUM

Capital Allocation

PREMIUM

Oracle’s Q2 Beats Expectations While Leaving Some Demand on the Table; Shares Overvalued

Julie Bhusal Sharma Equity Analyst

Analyst Note

| Julie Bhusal Sharma |

Oracle reported second-quarter fiscal 2021 results beating CapIQ consensus estimates for revenue and adjusted earnings per share. Notably, on the earnings call, however, was Chairman Larry Ellison’s comments on how Oracle’s supply fell short of demand as a result of Oracle’s lack of capacity in Oracle Cloud Infrastructure, or OCI,--which is Oracle’s infrastructure as a services, or IaaS, offering. While demand for Oracle’s IaaS is encouraging, Oracle’s inability to forecast such demand is not, and we expect overall demand for OCI to still fall short of what demand is for more robust IaaS competitors like AWS and Azure. Considering the quarter’s results and third-quarter outlook roughly in line with our former expectations, we are maintaining our fair value estimate of $53 per share for Oracle. With shares hardly moving around its $60 per share market price afterhours, we would recommend waiting for a pullback before committing capital to the wide-moat name.

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Company Profile

Business Description

Oracle provides database technology and enterprise resource planning, or ERP, software to enterprises around the world. Founded in 1977, Oracle pioneered the first commercial SQL-based relational database management system. Today, Oracle has 430,000 customers in 175 countries, supported by its base of 136,000 employees.

Contact
500 Oracle Parkway
Redwood City, CA, 94065
T +1 650 506-7000
Sector Technology
Industry Software - Infrastructure
Most Recent Earnings Nov 30, 2020
Fiscal Year End May 31, 2021
Stock Type Slow Growth
Employees 135,000

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