Database and cloud solutions provider Oracle (NASDAQ: ORCL) shares were smoked on the fiscal Q1 2023 earnings report. The stock held up relatively well until the company extent of the damage of FX-related headwinds. Until 2022, FX Headwind didn’t really impact stocks much as the market focused more on performance in constant currency metrics. However, the Fed’s aggressive rate hikes have highlighted the negative effects of a strong US dollar. This has been made painfully clear by the panic sell-off in several US companies with extensive international operations, including: NVIDA (NASDAQ: NVDA), Salesforce (NYSE: CRM), Netflix (NASDAQ: NFLX), IBM (NYSE: IBM)and Johnson & Johnson (NYSE: JNJ). They have all inevitably had to cut their forward guidance to a certain extent. In fact, 30% of the revenue for companies in the S&P 500 (NYSEARCA: SPY) monetizing outside the US This will remain a worrying trend as long as the Fed continues rate increases to tackle record inflation. The strong US dollar evaporated (-$0.08) per share against Oracle’s earnings, up from the original (-5%) earlier estimate in June, in addition to lowering forward guidance. The company has included performance figures for its Cerner acquisition in the recent fiscal release of the first quarter 2023 earnings, boosting performance. Oracle proves that it is still a leader in the cloud and enterprise resource planning (ERP) segment. The short-term FX-related sell-off could present a buying opportunity for long-term investors to take a position in Oracle.
Oracle Enterprise Resource Planning
ERP is a type of business management software that enables real-time analysis, automation, data sharing and management of an organization’s business processes through a set of integrated applications. It uses robust databases to track a company’s resources across all departments, including accounting, purchasing, sales, inventory, order processing, human resources, and manufacturing. It is literally the central nervous system of a company. Oracle announced expanded relationships to access its database services for: Microsoft (NASDAQ: MSFT) Azure Cloud and Amazon (NASDAQ:AMZN) Cloud platform customers. Oracle is a leading provider of ERP that are competitor SAP (NYSE: SAP) with notable victories.
Oracle Attractive Pullback Levels
Using the gun cards on the weekly and daily timeframes provides a medium-term view of the price action on ORCL stocks. The weekly gun chart plunged on earnings via the 5-period moving average (MA) at $74.55 and the 15-period MA at $73.40. The swing sits at $64.14 Fibonacci (fib) level. Shares fell through the week market structure layer (MSL) buy trigger for $72.85. The weekly 200-period MA support is at $65.42 and weekly lower Bollinger Bands (BBs) just below the $64.16 fib level. The daily gun chart breakdown formed as stocks collapsed through the 5-period daily MA at $72.86, 15-period MA at $74.02 and the 50-period MA at $75.07. The stochastics went back down after he rejected the 40 band. The daily lower BBs were tested at $68.87. It is important to look to the lower BBs as a potential support as both weekly and daily stochastic have mini inverse pups. Attractive pullback levels sit at the $67.69 fib level, $66.73 fib, $64.16 fib, $61.67 and the $60.66 fib level.
Juiced by Cerner
On September 12, 2022, Oracle announced its first quarter 2023 results for the quarter ended August 2022. The company reported earnings per share (EPS) of $1.03 versus $1.07 by consensus analysts, . Revenues grew 17.7% or 23% in constant currency year-over-year (YoY) to $11.45 billion, beating analyst estimates by $11.44 billion. This includes the numbers for Cerner, which has had its “best revenue quarter in history” according to Oracle CEO Safra Catz. He noted that even without Cerner, Oracle had 8% YoY organic growth. Cloud revenue grew by double digits and the two cloud businesses (Infrastructure and Applications) now account for 30% of total revenue. The various segments posted double-digit gains, including Cloud Infrastructure up 52% or 58% in constant currency with over 1,000 new customers, Cloud Applications up 43% or 48% in constant currency, Fusion ERP up of 33% or 38% in constant currency and NetSuite ERP.
Microsoft Azure and Amazon Cloud Multicloud Connect
Oracle Chairman and Co-Founder Larry Ellison added, “In the first quarter, we expanded our relationship with Microsoft by delivering all versions of the Oracle database directly to Microsoft Azure customers. Now all Microsoft customers have direct access to the Oracle Exadata Cloud Service, the Oracle Autonomous Database, and any other Oracle Database version directly from the Azure Cloud.Today we are also announcing that Amazon Web Services customers will have direct access to Oracle’s MySQL HeatWave database running in the Amazon Cloud. This allows AWS users to enable transaction processing, real-time analytics, and machine learning on the single unified MySQL service.MySQL HeatWave delivers 7x better price performance compared to Amazon Redshift and 10x better than Snowflake, 25x faster than Redshift ML and up to 10x higher throughput than Aurora See today’s MySQL HeatWave press release for customer performance benchmark verification.”