Oracle Corporation (Ticker Symbol: ORCL) announced this week that they will be hiring nearly 2,000 employees as part of a strategy to expand the company’s cloud computing services to additional locations around the globe. The American multinational computer technology corporation headquartered in Redwood Shores, California plans to open roughly 20 additional cloud data centers by the end of next year. Oracle is going to have job additions in the Seattle and San Francisco hubs and also plans on expanding in Europe, Asia, and Latin America.
Oracle is trying to keep up with Amazon Web Services and Microsoft who both have been rapidly expanding in cloud services. The aggressive move by Oracle into cloud computing services will help them transition their business software for finance and sales to the new systems they are creating over the next 12 months.
An analyst from Jefferies lowered his price target on Oracle to $66.00 down from $72.00. He also cut his rating on the stock from “buy” to “hold.” The analyst noted that Oracle was hurting in its infrastructure business as the company begins focusing more on the cloud.
Oracle reported earnings per share of .81 cents last quarter which was right in line with Wall Street analysts’ expectations. The company also reported a revenue miss of $9.22 billion vs. Wall Street analysts’ expectations of $9.29 billion.
The above image is a chart of Oracle’s stock over the past five years. Oracle had a rough start in 2015 led by multiple disappointing earnings and guidance reports. Oracle’s stock put in a bottom during the 3rd and 4th quarters of 2015 while forming a bullish divergence pattern where the stock makes a lower low in price but the Relative Strength Index makes a higher low (as indicated on the chart by the green lines). Traders and investors sometimes look at divergences for a possible pause within the current trend, which can at times lead to a reversal, as occurred in Oracle’s case.
The stock traded higher over the course of the next year and broke through its downtrend in the first quarter of 2017. Oracle proceeded to trade higher finding some price resistance just above the $53.00 price level. The stock became stuck in a ten-dollar trading range between roughly the $42.00 and $53.00 price levels until the Oracle broke from that range in the second quarter of 2019. Currently, the stock is positive for the year and trading in between its 100- and 200-day moving averages.
(Chart above courtesy of www.tipranks.com)
Based on a survey of 18 analysts offering 12-month price targets, the average price target for Oracle’s stock is $57.75. According to that number, the stock is priced at a discount relative to Wall Street’s analysts and could be considered undervalued around current levels near $54.73.
Oracle is set to create another 2,000 jobs and the move into the cloud computing and storage space will give the company a much stronger presence in the growing $40 billion market.
Investors in the space should look to Oracle’s next earnings release on December 18th for fresh news within the company.