One of the most influential analysts on Wall Street provided Oracle with a positive research note yesterday, which caused shares of the database supplier to rise 11/16 to close at 27 11/16, but analysts elsewhere remained sceptical of a quick recovery.
The move by Charles Phillips, analyst at Morgan Stanley Dean Witter, put the stock five points ahead of their early December trading level, when shares fell by almost 50 per cent to a 52 week low of 17 5/8 just before Oracle released its disappointing second quarter figures. The shares have been bouncing back slowly, but jumped 3 1/8 or 11 per cent last Friday.
Phillips issued the positive note at least partly as a result of positive statements made by Oracle executives a month ago and raised his rating to "outperform" from "neutral". He also increased his third quarter earnings estimate to $0.19 per share from $0.17 per share.
"I think they have this quarter under control and are going into the fourth quarter with the sales force a little more focused," he said.
In his research note, Phillips wrote that Oracle's chief financial officer "was so downbeat about the company's prospects at the Morgan Stanley conference last month that he definitely needed a 'new pair of shoes to walk off them blues'. But, once the stock slid into the teens, management began putting out the word that things were looking better."
Phillips move brings his forecast into line with most of his colleagues on Wall Street, where the consensus forecast is also $0.19 per share, according to a survey of analysts conducted by First Call. Since early December, the consensus recommendation has fallen from nearly a "strong buy" to nearly a "hold".
But elsewhere, Esther Schreiber, analyst at Credit First Swiss, said that although she was encouraged by recent conversations with Larry Ellison, Oracle's chairman, who admitted the firm was aware of and was dealing with the need to play catch-up in application software sales, she was sceptical that Oracle could turn itself around quickly.
James Mandelson, analyst at SoundView Financial Group, was even less positive. He claimed that management had a credibility problem when making positive statements about the business and given the current share price, there was more negative risk than positive potential into the near term.
"They better put up a good February quarter because given where the stock is, there's really not much margin for error," he said.
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