Oracle has decided launching into growth to mitigate criticism about its evolution in recent times in the face of American Big Tech. And he has chosen to do it in a big way by betting on the health area: Cerner’s macro purchase, a healthcare IT solutions company for which you will pay this year, when the operation is completed $ 28.3 billion.
Is about the second largest operation in this area in all history after the 34,000 million that IBM paid in 2018 for Red Hat and is placed ahead of the 20,000 million that Microsoft disbursed at the beginning of last year to acquire Nuance. And similar in price to Saleforce’s purchase of Slack Technologies completed last July.
Also, nothing compares to the largest acquisition made by Oracle in its entire history. We are talking about the 10.3 billion he paid for PeopleSoft in 2004, after a fierce struggle to take over the company that lasted a year and a half. Y is its first large acquisition since 2016, when it bought cloud business management software provider Netsuite in 2016.
But overall, the market has reacted badly to the deal. Although Cerner is the second largest provider of electronic medical records behind Epic, the high price paid, with a premium of 20% over Cerner’s closing price the day before the offer, can be a handicap. Now the shareholders of the company must give their yes in addition to the competition authorities, for this offer in cash, which however will not force Oracle to borrow.
Courage has been punished after knowing the operation that has already lost more than 18% since its highs of last December 10, when the market applauded his last quarter results. And above all its expectations: earnings of more than 15% after exceeding expectations and marking its best day since March 2020 and its second highest profit in the last 20 years to $ 106.34 per share.
To give you an idea of what it meant, In that session alone, Larry Ellison, the founder and president of Oracle, earned $ 16 billion. And above all, they read positively the improvement of their guide: profits and income that will exceed expectations in the second quarter of 2022.
All this has been left behind after the doubts presented by the operation in progress, although of the advance of the value in 35% during the past year. Only from Deutsche Bank, One of the firms that together with Stifel Nicolaus and Piper Sandler improved their target price, keep their eyes on Oracle positive after this acquisition. From the German entity they endorse your price target at $ 120 per share from the previous 110. His analyst Brad Zelnick is still betting on buying his shares.
It asserts that after overcoming the shock of its largest purchase in its history, at a time when its organic prospects look so promising, investors will come to appreciate the merits of the Cerner acquisition. In the future consider that Cerner is both financially and strategically a sound purchasing decision for Oracle.
From Stifel, However, they consider that these aggressive purchases to date had done very well for both the market value and the company, however, They claim that now the moment has changed because the sector is in the midst of strong growth driven further by an architectural change that is taking place in the cloud.
We will have to wait for events while from Tipranks, the market average is postulated for maintaining portfolio value for 14 of the 20 analysts covering Oracle. 6 they choose to buy. Its average price target is $ 105.07 per share, which contributes a potential of 20.5% for the next 12 months.
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