Briefing is extremely bullish on ORCL; sets target at $35
Brief: Oracle is the world's leading supplier of information management software...
Company offers its database, tools and application products, along with related
consulting, education and support services in more than 145 countries around the world.
Trading Points
Stock has been a major underperformer over the past few months, falling from a
high of 40 1/2 to low-20s... Anxiety over revenue growth major reason for stock's
woes... But Briefing.com contends that worries exaggerated... World's second
largest software company poised to exploit new/existing markets to post solid
double-digit top and bottom line growth over next few years.
Company debuted a new application that enables cable TV operators and
broadcasters to provide customers with Internet communicaitons, including e-mail,
e-commerce and video-on-demand... Product called Oracle iTV designed to close
gap between TV and Net as more and more broadcasters and cable companies
switch to digital transmisson as per FCC mandate.
ORCL also recently announced plans to go after leading share of enterprise
application integration (EAI) market... Software used to link client/server, legacy
sytems and Web-based applications, as well as dbase applications from the likes of
Oracle... ORCL intends to make EAI software part of technology "suite" it sells to
large corporate customers... EAI market estimated to be about $300 mln...
However, projected to grow to over $1 bln by 2001 and over $5 bln by year
2002.
Main businesses benefitting from rebound in Japanese market, growth in Latin
American region and rapid growth of Internet/e-commerce.
Strong management team, solid financials and discounted valuations also bode well
for long-term.
ORCL trades at 27.4x estimated FY99 earnings and 22.8x projected FY00
results, with a long-term growth rate of 24%... Given that ORCL's growth rate
exceeds market growth rate by more than 3x, Briefing.com contends that traders
should take advantage of discounted relativemultiples to do some bargain hunting.
Our 12- to 18-month target is 35. |
