Oracle's Shares Are Soaring After It Is Named The Second Biggest Software Company In The World

Oracle's shares hit a 52-year high on Tuesday of $41.99, and at least two Wall Street analysts say they expect the stock to rise even further.

This is thanks to a report issued Monday from market researcher Gartner that proclaimed Oracle the second biggest software company in the world, after Microsoft, based on 2013 revenues.

Oracle inched ahead of IBM to clinch the No. 2 spot for the first time, Gartner research vice president Chad Eschinger said in the report.

Microsoft remained solidly in the No. 1 spot.

Oracle's good results were part of an overall good year for the enterprise software industry, where revenue grew 4.8% to $407.3 billion in 2013, from $388.5 billion in 2012, Gartner said.

Oracle is selling more software because it is selling more bundles where the hardware, software and cloud services are all combined, CEO Larry Ellison said to analysts when the company announced earnings in March:

Customers want us to integrate the hardware and software and make it work together, so they don't have to. As customers shift to pre-integrated hardware and cloud computing, in search of lower costs and more rapid implementations, Oracle is presented with new opportunities for leadership in a number of market categories.

Once the Gartner report was released, Wall Street analyst Stifel reiterated a buy rating on Oracle and a target price of $43 a share. BMO Capital maintained its outperform and raised its target price to $45 from $42.

The BMO report says:

While Oracle's slowing growth has been the key issue on the stock, we see an improving outlook as much of the transitional work is now behind the company. Accelerating revenue growth and below-trend valuation leave us positive on the shares.

Salesforce.com also did well in 2013, growing the fastest, to land among the top 10 biggest software companies in the world for the first time. In 2012, Salesforce was No. 12.

IBM declined comment.

Table 1. Top 10 Worldwide Software Vendors, Worldwide, 2012-2013 (Billions of Dollars)

Rank 2013	Rank 2012	Vendor	2013 Revenue	2012 Revenue	2012-2013 Growth Rate (%)
1	1	Microsoft	65.7	62.0	6.0
2	3	Oracle	29.6	28.7	3.4
3	2	IBM	29.1	28.7	1.4
4	4	SAP	18.5	16.9	9.5
5	5	Symantec	6.4	6.4	-0.8
6	6	EMC	5.6	5.4	4.9
7	7	HP	4.9	5.0	-2.7
8	9	VMware	4.8	4.2	14.1
9	8	CA Technologies	4.2	4.3	-2.6
10	12	Salesforce.com	3.8	2.9	33.3
		Others	234.6	224.0	4.7
		Total	407.3	388.5	4.8

Source: Gartner (March 2014)