Oracle: Barclays Trims Ests, Target; But Stays Bullish

Barclays Capital software analyst Israel Hernandez this morning trimmed EPS estimates for Oracle (ORCL), while cutting his price target on the stock to $22 from $27. His EPS estimate for the May 2009 fiscal year drops to $1.44 from $1.55; for FY 2010, he goes to $1.55, from $1.76. The new numbers are below the Street at $1.49 and $1.66, respectively.

For FY Q2 ending November, he now sees 33 cents, down from 36 cents, and below the Street at 35 cents.

Hernandez wrote in a research note that the lower estimates reflect - surprise! - the deteriorating macro environment and currency headwinds. He sees ‘09 license growth down 4%; he previously had been expecting 10% growth. But Hernandez says that maintenance growth should provide offset to a decline in new license.

Hernandez asserts that “it is prudent” to lower estimates here, given “lower closure rates” anbd a contraction in IT spending over the next several quarters. He also notes that the current Oracle guidance for Q2 came in mid-September, before the height of the financial and credit crisis.

Nonetheless, he maintains an Overweight rating on the stock.

ORCL today is up 39 cents, or 2.4%, to $16.77.

Source: Eric Savitz @ blogs.barrons.com

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