Coronavirus fears could undermine Oracle's business in what's usually its strongest quarter, analyst warns
- Oracle reports quarterly results on Thursday, and Wall Street will be paying close attention to what the tech giant says about the impact of the coronavirus crisis.
- Oracle's current quarter, which ends in May, is the tech giant's "typically strongest" period, but the global crisis could have a serious impact on the company's sales, UBS analyst Jennifer Swanson Lowe told clients in a note.
- "We see some risk to Q4 guidance as coronavirus adds uncertainty to the company's ability to close large license deals in its typically-strongest May quarter," Swanson Lowe said.
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Oracle's current quarter, which ends in May, is the tech giant's "typically strongest" - but the coronavirus crisis could drastically change that, a Wall Street analyst said Tuesday
Oracle is set to report fiscal third-quarter results on Thursday, and the focus will be on what CEO Safra Catz and founder Larry Ellison say about the impact of the global health crisis, UBS analyst Jennifer Swanson Lowe told clients in a note.
"We think Q3 results should be largely unaffected, but we see some risk to Q4 guidance as coronavirus adds uncertainty to the company's ability to close large license deals in its typically-strongest May quarter," Lowe said.
"We think it's likely that the company backs off of prior targets for FY20 cc revenue growth to exceed fiscal 2019 growth given that hitting this relies on strong Q4 results."
Oracle is a major player in the market for enterprise tech used to set up private data centers. But the company has been struggling to establish a stronger presence in the cloud, which lets businesses set up networks on web-based platforms, allowing them to scale down or abandon private data centers.
Oracle has been highlighting its gains in the cloud, and Lowe said she expects "positive commentary" on the company's initiatives, particularly its autonomous data base product.
But it's the other major segments of Oracle's business that could take a beating from the global crisis.
"Other legacy businesses within Oracle likely continue to drag on overall reported growth," she said, noting that the coronavirus could have an impact on "sales cycles, particularly as Oracle's significant license exposure means slower sales show up fairly quickly" in the company's financials.
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