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Shares of Oracle Corp (ORCL - Analyst Report) hit a 52-week high of $36.96 on Thursday, Dec 19, 2013. The bullish run reflects Oracle’s better-than-expected second quarter results and an optimistic guidance.

The closing price of Oracle on Dec 19 was $36.60, representing a modest one-year return of about 7.8% and a year-to-date return of about 5.5%. According to Bloomberg, this was Oracle’s highest closing price since Oct 2000.

The S&P 500 jumped 25.3% and 23.7%, respectively during the same period. However, Oracle’s returns (both one-year and year-to-date) are much better than its nearest rivals International Business Machines (IBM - Analyst Report) and SAP AG (SAP - Analyst Report).

Oracle delivered a positive average earnings surprise of 2.4% over the past four quarters. This Zacks Rank #2 (Buy) stock has a market cap of $157.69 billion and a long-term expected earnings growth rate of 12.1%.

Good Second Quarter, Optimistic Outlook

Oracle beat the Zacks Consensus Estimates on both lines in the second quarter of fiscal 2014. Earnings of 66 cents per share were a couple of cents ahead of the Zacks Consensus Estimate.

Revenues of $9.28 billion increased 2.0% year over year and succeeded in beating the consensus mark after missing it in the past three quarters. The company continues to add new customers that include the likes of Procter & Gamble (PG - Analyst Report).

For the third quarter of 2014, Oracle expects non-GAAP earnings in the range of 68 to 72 cents per share. Revenues on a non-GAAP basis are expected to grow in the range of 2.0% to 6.0% (in $).

Key Growth Catalysts

We believe that strong engineered systems and cloud bookings are positives in the near term. Also, the speedy adoption of engineered systems and cloud suites will drive incremental top-line growth, going ahead.

Oracle’s low cost engineered systems (Oracle Virtual Compute Appliance) are also expected to attract price-sensitive customers in the long run. Moreover, higher subscription revenues are expected to provide a recurring high margin revenue base, going forward.

Oracle’s strong balance sheet and cash flow generation ability are also expected to support and expand its current divided yield of 1.40% in 2014 and beyond.

Estimate Revision

The Zacks Consensus Estimate for the third quarter remained unchanged at 67 cents over the past 30 days. For fiscal 2014 and 2015, the earnings estimate remained steady at $2.78 and $3.01, respectively over the same time frame.

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