UBS: Oracle jumps 10% after earnings - and the gains won't stop there
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Oracle Executive Chairman of the Board and Chief Technology Officer, Larry Ellison, delivers a keynote address during the 2014 Oracle Open World conference on September 28, 2014 in San Francisco, California. Ellison kicked off the week-long Oracle Open World conference that runs through October 2.
Oracle destroyed earnings Wednesday.
Shares of the company gained about 10% after the better than expected results.
UBS analyst Fatima Boolani thinks this is just the beginning for Oracle and shares are only going up from here.
With a price target of $52, about 4% higher than Oracle's current price, Boolani says the cloud-computing focus and better revenue streams is what will drive the stock higher.
"With shares +10% after-hours, the durability of the margin profile and mgmt's reiteration of delivering accelerating operating income growth, margin expansion (mid-40%s), and double-digit EPS growth in FY18 is clearly taking center-stage," Boolani wrote.
The company saw earnings per share of 89 cents per share, which was well ahead of the 78 cents that Wall Street was expecting. Revenue from Oracle's growing cloud-computer business was up 5.3% to $8.88 billion in the company's fourth quarter.
Because of an already low multiple of 15 times its price-to-earnings ratio, the company has room to grow. Boolani's price target comes from an expected 17 times price-to-earnings multiple, which is only slightly above its historic range.
Other investors are mirroring Boolani's price target increase. 21 of 38 analysts tracked by the FactSet financial data service raised their price targets, according to MarketWatch. The average price target for analysts following the earnings beat is now 6.1% above the current price.
Oracle is up 30.82% this year, including Wednesday's bump. Shares currently are trading at $50.39.
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