FBR wasn’t as disappointed by Oracle’s guidance as everyone else was. In fact, apparently untroubled by concerns about corporate spending in the recession, the firm reiterates its outperform. (We can’t say we share this enthusiasm).
ORCL reported revenue of $7.28 billion, up 24% year-over-year and ahead of the Street’s $6.93 billion estimate. EPS came in at $0.47, comfortably beating the $0.44 estimate. Friedman thinks that there could be more upside on the future as ORCL’s acquisition gain scale and begin to pad margins:
Strength was evenly distributed in the quarter across both the database & middleware (DBMW) and applications businesses, which bounced back nicely from a disappointing FY 3Q08. Operating margins exceeded expectations, and we believe there is further room for improvement as ORCL’s acquisitions gain scale. We believe ORCL’s acquisition strategy is working and will continue to bear fruit. By providing the deepest enterprise software stack in the market, ORCL is able to penetrate its existing base deeper and generate greater recurring revenues.
FY09 revenue and EPS estimates go from $24.65 billion and $1.45 to $26.11 and $1.52. Price target boosted to $26 from $25.