Oracle (NYSE: ORCL) shares continue to trade near-record levels, and with a $214B market capitalization, this stock is still reasonably valued. Oracle reported better than expected Q3 results in March, but Societe Generale downgraded this company’s shares from “buy” to “hold”.
Fundamental analysis: Societe Generale downgraded Oracle despite better than expected Q3 results
Oracle Corporation is an American multinational computer technology corporation that sells software, cloud engineered systems, and enterprise software products. Oracle reported Q3 results last month; total revenue has increased by 3% Y/Y to $10.09B while Q3 GAAP EPS was $1.68 (beats by $0.82).
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Total revenue has increased above the expectations (+ $20M), and it is important to say that operating cash flow was $14.7B during the trailing twelve months. The company declared a $0.32/quarterly share dividend, representing a 33.3% increase from the prior dividend.
“As you can see, we had a great quarter and executed well against our growth plan. Revenue was in line with our USD guidance while the EPS beat the midpoint of guidance by $0.05,” said Safra Catz, Chief Executive Officer of Oracle.
Oracle continues to move in the right direction, and the company’s management authorized an additional $20 billion for the repurchase of Oracle shares. Total revenue is expected to grow in the upcoming quarters, and with nearly $36 billion in cash, the balance sheet of this company remains stable.
Despite this, Societe Generale downgraded Oracle from “buy” to “hold” and reported that the valuation is now “up to speed with fundamentals.”
“While we remain impressed by Oracle’s strong traction in cloud ERP (growth averaging 30% over the past two years) and Autonomous Database operations, the pace of growth in both businesses continued to decelerate in recent quarters, albeit with an expanding revenue base,” said Richard Nguyen, an analyst from Societe Generale.
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Technical analysis: Oracle shares remain in a buy zone
Oracle shares have advanced more than 14% since the beginning of 2021, and at the current stock price, this company is reasonably valued.
The important support levels are $70 and $60, $80 and $85, represent the current resistance levels. If the price jumps above $80 resistance, it would be a signal to buy shares, and the next target could be around $85.
Rising above $85 supports the continuation of the bullish trend for Oracle shares, but if the price falls below $60, it would be a strong “sell” signal.
Oracle shares continue to trade near-record levels, and with a $214B market capitalization, this stock is still reasonably valued. This company continues to move in the right direction, but Societe Generale downgraded Oracle last month despite better than expected Q3 results.