Oracle Misses Earnings. Is It Time To Rotate Into Other Equities?

Oracle reported the second consecutive earnings miss after the closing bell yesterday. Bill Baruch joined CNBC to break down the latest fundamental trends and whether it might be time to look for alpha elsewhere.

TRANSCRIPT

It’s our chart of the day. Revenue. Ms.. Shares are down. As I said, guidance was below expectations. Bill Baruch joins us now because he owns the stock. He declared to us today that it’s, quote, on the chopping block. So are you selling it today? I’m not selling it today.

I want to see how we get through this week. And it feels like it actually was three months ago. I was sitting here saying the same thing. It’s on the chopping block. It ended up holding, you know, and a broad market sell off $100, which is a pretty critical level psychologically as well as technically. But a second time down here, I’m less enthusiastic about it again.

Second, bad quarter in a row, they’re clearly not able to capitalize on the I move the movement there. But Larry Ellison was obviously upbeat on the call last night. He’s talking about data centers. You know, I’m concerned about the scalability and data centers, though. He is hyping the EPS. I mean, estimates for the next quarter out are confirmed.

So if they’re able to to to to work these EVP and 132 I think 130 to 135 139 is the estimate by the analyst and the guidance at 127 they could hit that. I mean you could really generate some serious free cash flow down the road. But I mean, again, they build cloud here. Yeah, I’m a former Oracle share.

I’m a former Oracle shareholder. And fundamentally, I like the story. What’s the risk management here if this stock ends the week below its weekly closing 200 day moving average, which it looks increasingly likely, is that the point where you just say, all right, the trade is over and maybe I’ll reenter it at some point? Or is there something fundamental that you’re using instead?

I’m just curious how you think about that. Well, first, from a broader picture here, I want to be rotating out a bit of tech. I’m way too heavy in tech right now as I’m looking into next year. And I’m happy with tech in general as we get some momentum in December. Oracle’s left the dust, so that’s really the first one here on the chopping block.

Was on the show last week and talked about a cut in Marvell. So Oracle’s next in $100 year. That’s the level. So we go into the Fed tomorrow. If we have a broad market move down, I think Oracle would actually outpace some of the other stocks holding in a bit better. $100 is also three to retracement coming back down to the 2022 lows.

So it’s a big line in the sand there. Again, I’m not too enthusiastic about it, but I like to make decisions, if I can, on a weekly basis and see if it can respond to support here. But regardless, it’s going to be one of the first names that that I’m looking to cut here as it rotated to more financials in health care, into looking out to 2024.

Yeah, I don’t want you to bury that last comment that you made as you look to enter, you know, financials and maybe health care or whatever else. What specifically are you looking to buy within any of those spaces? Yeah, looking at financials broadly here, we own Bank of America, Jp morgan, as well as Morgan Stanley. Now I want to build up Bank of America a bit more.

I think it can outpace next year. I think the yield curve, we’ll see that steepen. And if you see Bank of America overlay with a ten year Treasury yield, it’s it’s been basically or ten year Treasury price actually when we’re seeing yields up this thing selling off. I’d like to get this add to it at a bit of a better price.

Now, regionals are also on my radar, but the problem with regionals here, you take a look at a name like Bank, Bank of Ozick, and it’s really outperformed. Well, when you take a look at a name like citizens and it has underperformed, obviously greatly. Now, do we see reversion of that and some of the underperforming ones really outperform next year and then you’re sort of missing it, or are you really taking some risk with that?

I like leading. It’s the big names right now. Bank of America is on top of my list. If I don’t take more risk into into a bank to capitalize on yields, I would then look to Morgan Stanley and start increasing my exposure there, or maybe adding a name like Goldman Sachs. But again, in 2024, I think we’re to see those financials really having solid year.

All right, Bill, appreciate you coming on. Thank you. Good update. Now to Dom Chu, who has a market flash —-

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