Oracle Pre-earnings Analysis
Chart done on daily timeframe. It’s been nearly a year since Oracle’s stock made the significant move above 100.00, but buyers haven’t been able to bring enough strength to continue the push. Oracle reached a high of 128.25 in 2023 and has lagged behind the market rally to start off this year, but earnings could be a catalyst for them to finally make a move. The database software company is set to release their Q3 earnings results and like most other tech companies, the big focus will be around artificial intelligence. Oracle has an advantage over many other new AI companies because it is an established company who’s already trusted by many enterprises. Revenue patterns over the last seven years have reflected slow and steady growth for them, so the introduction of artificial intelligence is only likely to help them boost guidance. Net income and free cash flow have also been growing, which is attractive to investors. The downside about ORCL’s stock is its valuation at 31x P/E. A healthy P/E is usually between 15-25 so Oracle will need to surpass profit expectations substantially to justify the current stock price. Analysts are expecting EPS to come in at 1.09 for the quarter, slightly higher than the previous result of 1.05. Given the excitement around AI, and the modest analysts estimates, ORCL should meet these expectations.
Option chain analysis
Options expiring on March 15th are currently reflecting an implied volatility reading of about 102%, which translates to about a $10.00 move in the underlying stock. So if Oracle meets earnings and posts strong guidance then the stock will likely push to ab out 123.00. If they miss then the downside target is about 103.00.