Oracle Slides On Weaker Revenue Growth, Low Earnings Guidance

Shares of Oracle (ORCL) are under pressure on Thursday despite better than expected third-quarter earnings per share, as revenue growth for the quarter at constant currency fell short of management's guidance range and quarterly earnings guidance disappointed. Following the results, Societe Generale analyst Richard Nguyen downgraded the stock to Hold, saying valuation has "caught up to speed with fundamentals."

RESULTS: Oracle reported third-quarter adjusted earnings per share of $1.16 and revenue of $10.1B, with consensus at $1.11 and $10.07B, respectively. However, sales were flat on a constant currency basis and missed Oracle's growth projection of 1%-3%. The enterprise software maker reported third-quarter Cloud Services and License Support revenues of $7.3B, up 5%, and Cloud license and on-premise license revenues of $1.3B, up 4%. For the fourth quarter, Oracle sees earnings per share between $1.28-$1.32 in USD or $1.20-$1.24 constant currency, with consensus at $1.28. The company also sees fourth-quarter revenue up 5%-7% in USD.

Additionally, Oracle announced that its board of directors increased the authorization for share repurchases by $20B and declared a quarterly cash dividend of 32c per share of outstanding common stock, reflecting a 33% increase over the current quarterly dividend of 24c. Larry Ellison, Oracle's Chairman of the Board, Chief Technology Officer, and largest stockholder, did not participate in the deliberation, or the vote on this matter, the company noted. This increased dividend will be paid to stockholders of record as of the close of business on April 8, with a payment date of April 22.

MOVING TO THE SIDELINES: Societe Generale analyst Richard Nguyen downgraded Oracle to Hold from Buy with a price target of $76, up from $70 after the company reported third-quarter results with a beat on earnings and gave fourth-quarter guidance that was "broadly in line" with expectations. For the fiscal year 2021, Nguyen "nudged up" his sales estimates by 1.1% and his earnings per share estimate by 1.3%. For the fiscal year 2022, he increased his revenue and earnings per share forecasts by 1.2% and 3.8%, respectively.

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