November 14, 2007 / 3:08 PM / 10 years ago

UPDATE 1-RESEARCH ALERT-CIBC, Broadpoint upgrade Oracle

(Recasts; adds analysts’ comments, background details and updates share movement)

Nov 14 (Reuters) - CIBC World Markets and Broadpoint Capital upgraded Oracle Corp ORCL.O on valuation, with Broadpoint saying Oracle can weather a potential economic downturn better than most technology firms as nearly half of its revenue stems from recurring maintenance contracts.

CIBC analyst Brad Reback raised his rating on the world’s second-largest software maker to “sector outperformer” from “sector performer,” while Broadpoint analyst Mark Murphy raised his rating to “buy” from “neutral.”

Both analysts set a price target of $24 on the stock.

Oracle should continue to post double-digit earnings-per-share in the coming years, despite a potential IT spending slowdown, helped partly by its expanding product portfolio and growing maintenance base, CIBC’s Reback said.

He added that Oracle’s stock trades at 13.5 times his EPS forecast of $1.49 for calendar year 2009 and that this is an attractive entry point for investors, partly due to Oracle’s strengthening market position.

Oracle, which has acquired at least five software companies since January 2006, could pick up the pace of its acquisition activity if the market continues its downward slide, to take advantage of favorable pricing, Reback said.

He termed Oracle’s recent stand-off with business software maker BEA Systems Inc’s BEAS.O management as “indicative of Oracle’s discipline on the acquisition front.”

Last month, Oracle withdrew its $17-per-share bid for BEA after a deadline lapsed with no sign that BEA had budged from its view that it was worth $21 a share.

Shares of the Redwood City, California-based company were trading down about 2 percent at $20.14 in morning trade on the Nasdaq. (Reporting by Tenzin Pema in Bangalore; Editing by Himani Sarkar)

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