Oracle Downgraded to HOLD

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Richard Davis and David Evanson, Winter, 2011

Following Oracle’s (ORCL) earnings Canaccord Genuity technology analyst Richard Davis downgraded the company to a HOLD rating and lowered his price target 26% to $28 from $38. Mr. Davis said:
Image representing Oracle Corporation as depic…

“We expect the shares to trade sideways for the next two to three quarters.”

He added, “ORCL should not be rated a Buy because even after a probable dead cat bounce Oracle will have to rebuild confidence that the firm is not is not headed to Microsoft’s (MSFT) valuation level (7x) over the next few years. Therefore, we can no longer rate ORCL a Buy.”

And went on to say, “While logic should halt ORCL’s decline in the $26-28 range, our experience is that stocks over-react to problems, especially at year end when few PMs will want to show ORCL in his or her portfolio.”