Oracle shares rocket 15% on strong earnings and outlook

A sign is posted in front of Oracle headquarters on December 09, 2021 in Redwood Shores, California.

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Shares of Oracle rose more than 15% in morning trading Friday after the company reported earnings and revenue that beat analyst estimates for the second quarter of 2022.

Oracle stock is on track for its best day since March 2020 and its second-biggest gain in the past 20 years. The spike is set to add roughly $38 billion to its market cap, bringing it to about $281 billion.

The company reported $1.21 per share, adjusted in earnings, exceeding analyst estimates of $1.11 per share, according to Refinitiv. It also brought in $10.36 billion for the quarter in revenue, beating estimates of $10.21 billion.

Wall Street liked Oracle’s cloud strategy.

Deutsche Bank on Friday upgraded Oracle to a buy rating and raised its price target from $110 to $120. “Oracle reported its cleanest quarter in several years, beating on all the right metrics and guiding above expectations for the remainder of FY22,” Deutsche Bank analysts said in a note to investors. “While strong validation of Oracle’s strategy, it also appears we are finally seeing an ongoing positive mix shift drive a meaningful inflection in the financials.”

“Despite a valuation multiple the ORCL stock hasn’t seen in nearly 15 years, we have believed the next leg up would be driven by confidence in OCI (Oracle Cloud Infrastructure) as a credible player in the broader public cloud market,” the Deutsche Bank analysts added.

Piper Sandler and Stifel Nicolaus also raised price targets but maintained the equivalent of a hold rating.

Oracle reported a net loss for the quarter of $1.25 billion, however, compared to net income of $2.44 billion it reported in the year-ago quarter. That was due to a payment resulting from a judgement in a long-running dispute related to former CEO Mark Hurd’s arrival at the company in 2010 from HP. Hurd died in 2019.

Oracle reported guidance for the fiscal third quarter that fell at the midpoint of Wall Street expectations, at an adjusted $1.16 per share. It also expects revenue to of $10.56 billion, implying about 5% revenue growth, on the high-end of analysts’ estimated range.

-CNBC’s Jordan Novet contributed to this report.

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