Oracle's surge fails to lead to a broad software rally

Jun. 14, 2022 4:49 PM ETOracle Corporation (ORCL), MSFT, WDAY, CRMDOCU, COUP, SNOW, ADBEBy: Rex Crum, SA News Editor5 Comments

Oracle headquarter building in Bucharest. Logo of the Oracle company on a office building.

Cristi Croitoru/iStock Editorial via Getty Images

Software stocks, especially those heavily in the cloud services market, had a mixed go of it Tuesday as an upbeat quarterly report and forecast from Oracle (NYSE:ORCL) had short coattails for the rest of the sector.

Among software stocks, Microsoft (NASDAQ:MSFT) rose almost 1% on the day while Adobe (ADBE) shares gave up 0.2% and Snowflake (SNOW), eked out a small gain by the time U.S. stock markets closed.

Meanwhile, Salesforce (NYSE:CRM) slipped by 1%, Workday (NASDAQ:WDAY) shares gave up 2%, and Coupa Software (COUP) fell by 3.4%. DocuSign (DOCU) shares fell by 3%, and touched a 52-week-low of $57.14 during the day as the electronic signature and services company continued to reel following last week's earnings report and forecast that failed to meet Wall Street's expectations.

For its part, Oracle (ORCL) shares climbed almost 11% after the company reported better-than-expected fourth-quarter results and gave a first-quarter outlook that called for revenue to grow from a year ago, and which many analysts described as "solid."

However, while investors greeted Oracle's (ORCL) results with enthusiasm, some analysts said they were still remaining cautious about the company and if anything it reported can suggest better times ahead for the software sector.

BMO Capital Markets analyst Keith Bachman noted that while Oracle (ORCL) is "well-positioned" for the current investment environment, he said that the company's license and database sales growth is "unlikely to continue" following a big nine-figure deal that Oracle (ORCL) inked with Salesforce (CRM) in the quarter. As such Bachman said the "most significant" source of Oracle's (ORCL) beating of revenue forecasts in the quarter is "not sustainable."

At UBS, analyst Karl Kierstead was more upbeat, and said that Oracle (ORCL) "managed through a tougher economic backdrop better than many expected," and that its results were "a positive for the Software space overall but a potential negative for Workday, which has cited large deal delays."

For the most part, Wall Street analysts have a hold rating on Oracle's (ORCL) stock, while Seeking Alpha authors are more positive with a buy rating on the company's shares. Meanwhile, Seeking Alpha's quant system, which as consistently outperformed the market, has a hold rating on Oracle's shares.which has cited large deal delays expected

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