Option Trade 
Oracle Corporation (NYSE:ORCL) Calls 
Wednesday, 14th September, 2016

** OPTION TRADE: Buy the ORCL DEC 16 2016 40.000 call at approximately $1.85. Place a pre-determined sell at $3.70.

Note: No protective stop losses added -- but if you wish to do so make it $0.75.

by Ian Harvey

September 14, 2016

Oracle Corporation (NYSE: ORCL), a provider of products and services that address all aspects of corporate information technology (IT) environments, including application, platform and infrastructure, will report its fiscal first-quarter numbers on September 15. The quarterly report is due after the market close, with the consensus calling for earnings of $0.58 per share and revenue of $8.70 billion for the quarter.

During the same period last year the company earned $0.53 per share, and the stock is up 11.0% on the year.

Oracle is coming off a mixed fiscal fourth-quarter report, in which the company missed on the bottom line, while reporting better than expected revenue. Wall Street overlooked the earnings miss, and while the stock traded sideways immediately following the report, shares have trended higher since the report, and have been in a sideways pattern for the last two months.

Analysts expect an earnings beat, with the street’s whisper number sitting a penny above the consensus at $0.59 per share. If the company is able to hit that number, and post another better than expected revenue figure, the stock should easily break out of its sideways pattern and climb to a new 52-week high. ORCL has a P/E of just 19.5, and with earnings forecast to rise 25.3% this year and 8.7% next year, there is still plenty of room to the upside for the stock.

Oracle Corp. has a 50 day moving average price of $41.07 and a 200-day moving average price of $40.28. Oracle Corp. has a 52 week low of $33.13 and a 52 week high of $42.00. The company has a market capitalization of $165.65 billion, a PE ratio of 19.41 and a beta of 1.08.

Why Oracle?

Oracle is gaining optimism that business trends are improving. In fact, consensus estimates call for the database titan to post 3% higher sales to mark its first uptick in that metric since the final quarter of 2014.

Oracle, which already enjoys a leading position in the enterprise software and database management system (DBMS) software market, has also been gaining ground on its cloud endeavors. Specifically, the company’s offerings in SaaS, PaaS and Big Data divisions have gained significant momentum in the past few quarters.

In fourth-quarter 2016, total cloud revenues, including infrastructure as a service (IaaS), were up 49% (up 51% on constant currency basis) to $859 million. Cloud SaaS and PaaS revenues jumped 66% year over year (up 68% on constant currency) to $690 million. Moreover, SaaS and PaaS billings surged 38% year over year, driven by an expanding customer base.

Oracle expects this momentum to continue in fiscal 2017. For the first quarter, the company anticipates SaaS and PaaS revenues to grow in the range of 75% to 80%. Further, total revenues are expected to grow in the range of 2% to 5%, while non-GAAP earnings are estimated to be in the range of 56 to 60 cents per share, on a constant currency basis.

Analyst Input

Oracle Corp. had its “buy” rating reaffirmed by analysts at Jefferies Group yesterday.

Also, on Monday, Oracle Corp. was upgraded by analysts at Vetr from a “buy” rating to a “strong-buy” rating. They now have a $45.46 price target on the stock.

Also, several other equities research analysts have recently commented on the company.

• 9/12/2016 – Oracle Corp. had its “buy” rating reaffirmed by analysts at Barclays PLC.

• 9/7/2016 – Oracle Corp. was downgraded by analysts at Vetr from a “strong-buy” rating to a “buy” rating. They now have a $45.58 price target on the stock.

• 9/6/2016 – Oracle Corp. was upgraded by analysts at Vetr from a “buy” rating to a “strong-buy” rating. They now have a $46.33 price target on the stock.

Four investment analysts have rated the stock with a sell rating, fourteen have issued a hold rating, twenty-five have given a buy rating and one has given a strong buy rating to the stock. Oracle Corp. presently has a consensus rating of “Buy” and an average price target of $44.54.

Harvey’s Options Volatility Indicator

Conclusion

Therefore, based on the facts above, and Harvey’s Options Volatility Indicator, the following option trade is recommended…..

** OPTION TRADE: Buy the ORCL DEC 16 2016 40.000 call at approximately $1.85. Place a pre-determined sell at $3.70.

Note: No protective stop losses added -- but if you wish to do so make it $0.75.

”Success is simple. Do what's right, the right way, at the right time.”

Option Tip for your Success!
Options traders are not successful because they win.
Options traders win because they are successful.



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