Oracle (ORCL) stock is soaring Tuesday after the enterprise IT firm beat top- and bottom-line expectations for its fiscal first quarter and announced an agreement with Amazon.com's (AMZN) cloud platform, Amazon Web Services (AWS).
In the three months ended August 31, Oracle's revenue increased 7% year-over-year to $13.3 billion, driven in part by a 10% surge in its cloud services & license support segment to $10.5 billion. Its earnings per share (EPS) were up 17% from the year-ago period to $1.39.
"As cloud services became Oracle's largest business, both our operating income and earnings per share growth accelerated," said Oracle CEO Safra Catz in a statement. The executive added that revenue performance obligations were up 53% from last year to a record $99 billion, and "that strong contract backlog will increase revenue growth throughout fiscal 2025."
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Oracle's results came in well above what analysts expected. Specifically, Wall Street was anticipating revenue of $13.2 billion and earnings of $1.32 per share, according to Yahoo Finance.
However, the biggest news from Oracle was that it signed a multi-cloud strategic agreement with AWS, Catz said. The two companies will launch Oracle Database@AWS that aims to simplify database administration, billing and customer support, Oracle says.
The company also declared a quarterly dividend of 40 cents per share, payable on October 24 to shareholders of record at the close of business on October 10.
Is Oracle stock a buy, sell or hold?
Oracle shares have surged nearly 50% for the year to date. Unsurprisingly, most of Wall Street is bullish on the tech stock.
According to S&P Global Market Intelligence, the average analyst target price for ORCL stock is $161.28, representing implied upside of roughly 3% to current levels. Additionally, the consensus recommendation is Buy.
However, financial services firm CFRA Research is more on the sidelines, as evidenced by its Hold rating and $150 price target on the large-cap stock.
CFRA Research analyst Angelo Zino thinks Infrastructure as a Service (IaaS) "remains the key growth driver, more than doubling in two years." This growth should accelerate over the current fiscal year and be supported by cloud expansion plans, he adds.
However, Zino also believes that aggressive capital expenditures spending, which is expected to double in fiscal 2025, and a net debt of $74 billion will limit free cash flow growth.
Related Content
-
Could the Election Impact Interest Rates?The election can indirectly impact interest rates, but the Federal Reserve remains in the driver's seat when it comes to borrowing costs.
-
Interest Rate Cuts and Inflation: What's Really Going On?For more than two years, we've heard a steady drumbeat of news highlighting inflation and its impact on interest rates. The correlation seems clear, but the issue is actually more complex.
-
Could the Election Impact Interest Rates?
The election can indirectly impact interest rates, but the Federal Reserve remains in the driver's seat when it comes to borrowing costs.
-
Interest Rate Cuts and Inflation: What's Really Going On?
For more than two years, we've heard a steady drumbeat of news highlighting inflation and its impact on interest rates. The correlation seems clear, but the issue is actually more complex.
-
How to Make a Charitable Plan That Won't Break Your BankGiving back is great … if you have a plan that's as sustainable and smart as it is generous. Here are five tips for giving wisely.
-
This Double-Dip Trust Benefit Really Is Too Good to Be TrueLet's clear up the confusion among some trust makers and taxpayers over how grantor trust status affects the step-up in basis and estate tax exclusion.
-
How to Structure Retirement Income to Tamp Down TaxesFrom Social Security to IRAs and investments, with smart tax planning, retirees can have some control over how much of their income they'll get to keep.
-
5 Stocks to Buy for a Harris PresidencyThe race for the White House is heating up and these five stocks are set to benefit if Kamala Harris claims victory.
-
Four Key Elements of a Good Estate PlanAn estate plan can be complex or simple, depending on your estate and your wishes, but every estate plan should accomplish these basic goals.
-
Stock Market Today: Stocks Rise as Fed Rate Cuts NearThe main indexes closed out the day and week notably higher as excitement swirls ahead of next week's rate cut.
