By Eric J. Savitz
Analysts Ari Terjanian and Max Lenhardt write in a research note that checks with Oracle partners found demand has improved relative to the company’s fiscal second quarter ended in November. The analysts also see a pickup in new business signings, in particular for artificial-intelligence customers and for the company’s Oracle Cloud Infrastructure unit generally.
“We believe ORCL has seen some improvement in AI signings, potentially tied to improved supply availability,” they write.
The Cleveland analysts also report that Oracle partners are adding staff to their practices, tied to a growing backlog of related work and expectations for improving end demand, with Oracle continuing to take market share both in enterprise apps and in the cloud.
Oracle is also seeing a pickup in signings tied to the company’s recently expanded partnership with Microsoft, Terjanian and Lenhardt add. In December, Oracle announced the availability of its database software on the Microsoft Azure cloud. The analysts say checks find “strong growth” for migrations to the Oracle cloud from on-premise versions of Oracle application software.
The Cleveland analysts see February quarter revenue of $13.41 billion, up 8.1% from a year ago, and ahead of the Street consensus at $13.29 billion. They forecast earnings of $1.39 a share for the period, a penny ahead of consensus.
For the May 2024 fiscal year, Terjanian and Lenhardt are likewise slightly ahead of consensus for the both the top and bottom lines.
“We see upside to estimates over the next couple of years and reiterate our Buy rating,” they write, adding that Oracle’s forecast for $65 billion in revenue in fiscal year 2026 with 10% annualized per-share earnings growth seems “reasonable.”
Write to Eric J. Savitz at eric.savitz@barrons.com