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Buy Oracle (ORCL) Stock as Tech Stocks Rebound?

Hopes of a continued tech stock rebound are on many investors’ wish lists this holiday season.

Oracle ORCL is a tech name worth considering, with the cloud computing firm still 22% off its highs despite a nice rally off its September lows.

Recent Performance

The Nasdaq has not been able to hold onto gains after recent rallies but as we can see from the nearby chart Oracle is still up nicely in recent months to outperform the S&P 500 and the tech index.   

It’s looking more and more likely that tech equities will gain momentum as the Fed begins to ease its interest rate hiking efforts. Jay Powell’s speech on Wednesday helped confirm the Fed’s plan to raise rates by 0.50% and not the 0.75% it had rolled out recently. The speech caused markets to rally, with the Nasdaq up 4.4% and Oracle closing up roughly 3%.

Zacks Investment Research
Zacks Investment Research


Image Source: Zacks Investment Research

With ORCL showing it can hold on to gains after rallies, investors may want to consider buying the stock. ORCL stock could be poised to move higher and has recovered most of its losses earlier in the year.

ORCL is only down -3% in 2022 to outperform the S&P 500’s -15% and the Nasdaq’s -27%. ORCL has also outperformed its peer group’s -28% that includes Salesforce CRM and Adobe ADBE. Over the last five years, ORCL’s total return is +86% to beat the broader market and its peer group’s +33%.

Zacks Investment Research
Zacks Investment Research


Image Source: Zacks Investment Research

Outlook & Valuation

ORCL has rallied 37% from its September low of $60.78 a share after slightly missing its fiscal Q1 earnings expectations. Even better, earnings estimate revisions have begun to rise as the company adjusts to the tougher economic and operating environment.

ORCL earnings are now expected to rise 1% in its fiscal 2023 and pop 11% in FY24 at $5.55 per share. Its sales are projected to climb 17% in FY23 and another 7% in FY24 to $52.97 billion. FY24 projections would represent 34% sales growth from pre-pandemic levels with 2019 sales at $39.50 billion.

Turning to valuation, ORCL trades at 20.2X earnings. This is below the industry average of 26X. Even better ORCL trades nicely below its decade-long high of 25.3X and closer to the median of 15.9X.

Zacks Investment Research
Zacks Investment Research


Image Source: Zacks Investment Research

Bottom Line

Oracle currently lands a Zacks Rank #2 (Buy) in correlation with rising earnings estimates for FY23 and FY24. As tech stocks look to regain momentum ORCL’s valuation could continue to support a sustained rally with the stock still trading attractive relative to its past. ORCL also offers investors a modest 1.54% annual dividend yield and the average Zacks Price Target still suggests 5% upside from current levels.

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Oracle Corporation (ORCL) : Free Stock Analysis Report

Salesforce Inc. (CRM) : Free Stock Analysis Report

Adobe Inc. (ADBE) : Free Stock Analysis Report

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