Oracle (NYSE: ORCL ) shares fell as much as 13.5% on Tuesday due to slowing cloud sales growth for the quarter, marking the largest one-day drop since March 2002.
Despite this drop, Oracle's shares are still up 34.1% for the year.
Oracle reported adjusted revenue of $12.45 billion, which represented an 8.8% year-over-year increase but was slightly below the estimated $12.44B. When considering revenue in constant currency, there was an 8% increase, below the consensus of 8.5%.
Additionally, Oracle's adjusted EPS stood at $1.19, surpassing the $1.03 from the previous year and exceeding the estimated $1.15.
Monness, Crespit, and Hardt analysts downgraded Oracle stock yesterday, while their JPMorgan colleagues did the same a couple of hours later.
“Oracle deserves credit for its multi-year accomplishments and total recurring revenue growth, but we view a low/mid-20s uFCF multiple as fair for ~8% non-Cerner growth glidepath targeted this year, and perhaps mid-single-digit growth in aggregate, with some hurdles emerging in the next several quarters,” JPMorgan analysts wrote in a downgrade note.
They added that the investment bank’s Generative AI CIO Survey, which was published in June, raised some questions about Oracle’s positioning. The analysts slashed the stock's price target by $12 to $100 per share.
“Very recently we have struggled to justify a valuation which had lifted to >25x EV/uFCF, resulting in our PT never exceeding $112 even amidst a recent cluster of ratings upgrades which temporarily lifted the stock above this level,” they further added.
Oracle shares are down a further half a percent in premarket New York trading on Wednesday.
Add Chart to Comment
We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:
- Enrich the conversation
- Stay focused and on track. Only post material that’s relevant to the topic being discussed.
- Be respectful. Even negative opinions can be framed positively and diplomatically.
- Use standard writing style. Include punctuation and upper and lower cases.
- NOTE: Spam and/or promotional messages and links within a comment will be removed
- Avoid profanity, slander or personal attacks directed at an author or another user.
- Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
- Only English comments will be allowed.
Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.