KeyBanc: The acquisition of Senna (CERN.US) is not of strategic significance, and the rating of Oracle (ORCL.US) is downgraded to “wait and see”

Time:2022-01-01 Source: 3948 views Trending Copy share

Zhitong Finance APP learned that KeyBanc analyst Michael Turits released a research report , downgrading Oracle's (ORCL.US) rating from “overweight” to “wait and see”. Turits said that Oracle’s acquisition of Senna (CERN.US) was affected. Seen as "increasing" revenue, but this is a "non-strategic" match.

The analyst pointed out that Oracle's acquisition of Senna for approximately US$28 billion in cash will help the company's profit and revenue growth, and help it further enter the healthcare field, but it may cause the company to lose its focus. It is not as enterprise SaaS, data base and cloud computing as strategic.

In addition, Turits said that because there are 23 billion US dollars on the balance sheet, this transaction may lead to more debt or financing, and these funds could have been used for stock repurchases, more strategic acquisitions or cloud capital expenditures.

Oracle's stock price rose slightly before the market to $91.91, and after the announcement of the acquisition plan on Monday, the company's stock price fell more than 5%. The company's share price so far this year has risen by more than 43%.

Oracle’s current share price is "reasonably valued" with a P/E ratio of 18.7 times, while the S&P 500 P/E ratio is 20.5 times.

Last week, Stifel analyst Brad Reback said that the acquisition of Senna may mark Oracle's return to an aggressive corporate acquisition strategy, which has acquired Sun Microsystems, Siebel Systems and PeopleSoft in the past few years.

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