Wall Street smiles on Oracle's upside profit surprise, but the stock doesn't respond.



NEW YORK (TheStreet) -- Wall Street was disappointed when Oracle(:ORCL) missed estimates last quarter, but the company seems to have righted its ship, and analysts are out Wednesday praising the progress.

Oracle had second-quarter execution issues, as it saw deals being delayed in the last few days of the quarter as customers sought additional internal approvals, but those problems seemed to be alleviated in the third quarter as the company topped the consensus profit view by nearly 11%.

There are still concerns about the company's cloud-computing strategy, but that didn't stop analysts from applauding the sequential improvement.

"Oracle has survived difficult periods in the past (1990 cash crunch and 2001 IT spending meltdown), so this firm knows how to pivot," said Canaccord Genuity analyst Richard Davis, who lifted his price target on the stock to $30 from $28 but kept a hold rating. "Oracle, however, is not ahead of its competitors in software architecture or business momentum. Could this change? Of course, but we believe Oracle is playing catch up for now."

Nomura Securities International analyst Rick Sherlund did not raise his price target or upgrade Oracle, but did lift his 2012 and 2013 estimates, as he sees potential earnings upside in the fourth quarter.

"We have raised our Fiscal 2012 EPs estimate to $2.42 from $2.36 reflecting mostly the upside from Fiscal Q3. For 2013, we raised our estimate to $2.59 from $2.57. Shares of Oracle remain Buy rated given the low valuation, and the potential for earning upside in the seasonally strong May Q4," wrote Sherlund, who has a buy rating on Oracle with a $32 price target.

Think Equity analyst Rajesh Ghai raised his price target to $43 from $38, writing that he was encouraged by Oracle's positive commentary on the Engineered Systems business.

"We view the renewed confidence at ORCL in the company's ability to accelerate the Engineered systems business as incrementally positive for MLNX. We remind investors that every ORCL Engineered system carries about $12K of MLNX content," wrote Ghai, who has a buy rating on the stock.

Oracle reported third-quarter non-GAAP earnings of 62 cents a share on $9.06 billion in non-GAAP revenue, beating average analysts' estimates compiled by Thomson Reuters for earnings of 56 cents a share and $9.02 billion in revenue.

Shares of Oracle fell 1.1% to $29.76 in afternoon action. Earlier in the session, they ran as high as $31.15.

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--Written by Chris Ciaccia in New York

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