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Austin, Texas-based Oracle Corporation (ORCL) offers products and services that address enterprise information technology environments. Valued at a market cap of $482.4 billion, the company offers cloud solutions and services that can be used to build and manage various cloud deployment models.
Companies worth $200 billion or more are generally described as “mega-cap” stocks, and Oracle fits right into that category with its market cap exceeding this threshold. The company is renowned for its powerful database management system (DBMS), known as Oracle Database, which is widely used by large enterprises for data storage and management.
This software giant is currently trading 16.9% below its 52-week high of $198.31, reached on Dec. 9. Moreover, shares of Oracle have declined 9.8% over the past three months, underperforming the iShares Expanded Tech-Software Sector ETF’s (IGV) 7.6% decrease during the same time frame.
Nonetheless, in the longer term, ORCL has rallied 47.9% over the past 52 weeks, massively outperforming IGV’s 12.6% returns. On a six-month basis, shares of Oracle are up 19%, outpacing IGV’s 11.6% gains over the same time frame.
To confirm its recent bearish trend, ORCL has been trading below its 50-day moving average since late February. Nonetheless, it has remained above its 200-day moving average since early March 2024.
Oracle’s recent underperformance can be primarily attributed to its slowing cloud application sales growth and uncertainty over returns on its investments. Although cloud services and license support revenues grew 12% to $10.8 billion in Q2, the pace of growth seemed inadequate considering Oracle's substantial investments in the sector.
On Dec. 9, following its Q2 earnings release, ORCL shares plunged 6.7% as the company reported weaker-than-expected non-GAAP earnings of $1.47 per share and revenues of $14.1 billion. On the brighter side, Oracle’s bottom line grew 9.7% year-over-year, and revenue advanced 9%, driven by continued momentum in its Oracle Cloud Infrastructure (OCI) business.
Oracle has significantly outpaced its rival, Adobe Inc. (ADBE), which declined 20.9% over the past 52 weeks and 23% over six months.
Despite Oracle’s recent underperformance, analysts remain moderately optimistic about its prospects. The stock has a consensus rating of “Moderate Buy” from the 33 analysts covering it, and the mean price target of $195.03 suggests a modest 18.4% premium to its current levels.
