Oracle Shares Jump As Cloud Acceleration & Database Cycle Ahead Causes RBC To Upgrade

In a report issued Monday morning, RBC Capital Markets analyst Ross MacMillan upgraded shares of Oracle Corporation (NYSE: ORCL) from Sector Perform to Outperform.

The Upgrade And PT Adjustment

The upgrade seeks to reflect a more bullish view on the company's cloud growth (both applications and platform) and a reiteration of the firm's belief that "the database business can show improving fundamentals over the next 12-18 months as 12C adoption accelerates."

The price target was also raised from $48 to $50. While estimates remained unchanged (EPS of $2.84 in 2015, $2.99 in 2016 and $3.29 in 2017), a higher multiple (15X FY17E EPS at end FY16 (May 2016) was used to reflect RBC's higher conviction of stronger underlying growth.

Related Link: Oracle Expectations Remain "Stubbornly High," According To Wedbush; Neutral Reiterated

What's Going On

According to the report, cloud applications and platform are accelerating: the firm takes "3 cuts at analyzing the business and all three suggests growth is accelerating [sic.]."

In addition, their takeaways from last week's HCM event suggest that "large cloud HCM customer references are building, the product portfolio is improving and the company's approach to selling cloud vs. on-premise has improved."

Finally, MacMillan reiterated his optimism on the database business.