Wunderlich Expects 'Strong Finish' From Oracle's Earnings

In a report published Monday, Wunderlich analyst Robert Breza maintained a Hold rating and price target of $47 on Oracle Corporation (NYSE: ORCL). The company is expected to report its Q4 results on Tuesday, after market close.

The analyst expects the company to report its EPS and revenue for Q4 at the high-end of the guidance, above the estimates and the consensus. The increase in the Euro/USD exchange rate since March is likely to have led to a revenue tailwind for the company. However, the results are also expected to reflect a revenue decline of about 3.2 percent, year on year.

While Oracle's shares have risen 3.4 percent since the last results announcement on March 17, Bulls are likely to look for continuing robust growth in the company's cloud offerings, along with above guidance Saas and PaaS bookings. Bears, on the other hand, are expected to look for "cannibalization of Oracle's software license business from cloud offerings, thus compressing near-term revenue growth," Breza said.

Q4 has historically been the seasonally strongest quarter for the company, with results usually being reported above the consensus. "Based on our checks with industry partners and resellers, we believe Oracle had a strong end to FY15 driven by its "Customer 2 Cloud" program, allowing customers to trade maintenance contracts into cloud subscriptions while adding additional services and capacity. We also expect a strong quarter from Oracle's engineered systems, which pulls its entire software stack along with its in-memory database," the Wunderlich report stated.

The analyst also expects the company to guide to a marginal increase in revenues at the mid-point of the guidance range, while the EPS guidance is expected to be left unchanged.

"In our opinion, as the company can increase revenue growth, investors will come back as EPS upside will likely follow," Breza added.