Oracle's Stock Falls After Analyst Downgrade

Oracle Corp.'s stock slipped 0.8% in premarket trade Thursday, after the software company was downgraded at FBR & Co., which cited limited upside potential given secular challenges to the core database business. Analyst Daniel Ives cut his rating to market perform from outperform, but kept his stock price target at $44, which is 8.7% above Wednesday's closing price of $40.48. He said that while Oracle has had some success with its focus on the cloud, that still remains a small piece of the company's revenue pie, and competition remains a key issue. Ives believes Oracle need to be aggressive on the merger front, as it is facing the same headwinds as its fellow "mature" technology stalwarts, which led to Dell's deal to buy EMC Corp. for $67 billion. "Although we have patiently awaited a turnaround story at Oracle, and the company has talked a great talk, the lack of consistent results, and empty M&A strategy, mixed checks in the November quarter so far, and major secular challenges from the likes of Amazon Web Services are hard to ignore, and thus make it tough to be bullish on the name at current levels," Ives wrote in a note to clients. The stock has dropped 10% year to date, while the SPDR Technology ETF has climbed 7.2% and the S&P 500 has gained 2.1%.

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