Brendan Barnicle, an analyst for Pacific Crest Securities, on Wednesday reiterated his outperform rating on Oracle's stock.
Oracle shares plunged nearly 10% on March 21 after its fiscal Q3 results released late the day earlier missed Wall Street expectations, as did the company's outlook. Here was IBD's report. Oracle executives mostly blamed poor sales execution for the miss.
In his report, Barnicle said his recent meeting with Thomas Kurian, Oracle's executive vice president of product development, gave him the impression that the miss was indeed due to the company's internal issues and not a reflection of market demand.
"We believe that Oracle will likely show better execution for its fiscal Q4, so we continue to see upside in Oracle to $44 (a share)," Barnicle wrote in a research note.
Oracle is scrambling to adopt a Software-as-a-Service model, where customers pay for software they use on a monthly basis, as the company moves its offerings to cloud-based computing. Oracle has traditionally sold its software through sales of licenses, where customers pay upfront.
In his report, Barnicle notes that Kurian said the company's sales team is making the transition to SaaS and is having some success selling Oracle's Fusion business. The Fusion package combines several components, including customer relationship management and human capital management, in one platform. It's aimed at rivals such as Salesforce.com and Workday.
"Oracle's Fusion business is growing and Oracle has over 150 customers live on Fusion, with 40% on human resources applications, 40% on customer relationship management applications and 20% on enterprise resource applications," Barnicle wrote.
Shares of Oracle were trading near 33.50 in the stock market today.
source: news.investors.com
