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Oracle (ORCL) is scheduled to report 2Q 2013 earnings after the close of trading on Tuesday, December 18. The software giant is expected to report its earnings right at the closing bell and host a conference call at 5:00 p.m. EST. Look for a possible reaction in the index futures and broad market ETFs when results are disclosed.

Key Metrics:

Non-GAAP EPS: Back in September, Oracle stated in its 1Q 2013 earnings conference call that Non-GAAP EPS for the current 2Q period is forecast to range between $0.59 to $0.63, up from $0.54 last year. The current Street estimate is $0.61 (Source: Yahoo! Finance).

Revenues: Oracle indicated it expects 2Q 2013 total revenue growth on a GAAP and non-GAAP basis to range from 1% to 5% in constant currency. That would equate to $8.888 billion to $9.240 billion. The consensus is toward the mid-point of that range at $9.03 billion - roughly flat with the year-ago period.

Even with the shares near a 52-week high, Oracle trades at just 15.8x trailing earnings, well below the 5-year average of 20x with a FWD PEG ratio of just 1.0, implying the shares are trading in-line with the estimated earnings growth rate.

Recent News

12/17: Jefferies expects Oracle to report in-line earnings after the close on December 18, according to a post on StreetInsider.com. The firm believes valuation remains attractive and raised the price target from $32 to $34.

12/07: Societe Generale raised its price target on Oracle from $30 to $35, based on the company's new product cycle and greater sales capacity, according to a post on Benzinga.com. The positive outlook comes about despite a weak macro backdrop, particularly in Europe and the risk with the U.S. fiscal cliff.

12/07: Wedbush initiated coverage on Oracle with a Neutral rating and $36 price target, according to a report on Benzinga.com. The somewhat cautious view was based on concerns over revenue growth. However, the firm noted that Oracle's revenue mix, product portfolio, and diverse customers make it somewhat defensive against the current backdrop.

Technical Review

Oracle shares are climbing back toward the 52-week high of $33.29 established in September - a potential resistance area in the event of a positive surprise on earnings. Conversely, there is soft support near $32.00, with further downside risk to $31.50, followed by the 50-Day SMA near $31.00, and $29.50. (Chart courtesy of StockCharts.com)

(click to enlarge)

Summary

Oracle shares are nearing a three-month high in advance of the 2Q 2013 earnings release on December 18, despite the weaker macroeconomic backdrop in North America and Europe. Despite those headwinds, the shares remain cheap at a mere 11x forward earnings and a forward PEG ratio of just 1.0. Furthermore, Oracle's broad product mix and diverse customer base serve to insulate the company from the broader fears over the state of the economy. Against this backdrop, look for Oracle to deliver bottom-line Non-GAAP EPS at or above the high end of the estimated range of $0.63, with revenues of at least $9.1 bln in order for the shares to reclaim the 52-week high. Should results disappoint or come in-line with estimates, there is downside risk to the $30.50 area, followed by the 200-Day SMA near $29.75.

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Source: Oracle Edging Higher Ahead Of 2Q Earnings On Tuesday