BARCLAYS: Oracle just needs one 'last missing piece' in its cloud business — but it's a big one (ORCL)


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Larry Ellison

  • Analysts at Barclays believe that customer acceptance is Oracle's last big hurdle when it comes to the success of its cloud product, according to a note published Tuesday.
  • Oracle has been slow to keep up with more aggressive competitors like Amazon Web Services and Microsoft Azure.
  • Nonetheless, Barclays said they are convinced that the "enterprise nature" of Oracle's cloud offering brings something to the table for businesses that its competitors can't.&

Oracle was late to the game in the booming market for enterprise cloud services. But according to a recent note from Barclays, Oracle now has all the pieces in place to begin mounting a serious challenge to the likes of Amazon, Microsoft& and Google.&

"We now see more detailed information about the offering, showcasing the enterprise nature of the Oracle Cloud but also closing the feature/function gap with other cloud providers," writes Barclays analyst Raimo Lenschow.

The only thing missing: Convincing customers that Oracle is a player.

After a flurry of recent product updates and other progress showcased by Oracle at its CloudWorld conference in New York City on Monday, Barclays reckons the company has a better shot at convincing customers than ever before.&

"The last missing piece is now customer acceptance and we see early adoption from customers that need enterprise class performance, such as supply chain vendors," Barclays wrote in the note.

Still a point of debate among investors

Oracle has a strong and longstanding reputation in the applications business, such as for ERP software, where it has extended its dominance into the software-as-a-service cloud offering, and where the only real competition is the much-smaller Workday. And with roughly 20,000 existing Oracle customers who still have on-premise ERP products, there's plenty of room for Oracle to continue expanding its application cloud business.

But the real upside for Oracle will come from growing its cloud platform business, a potentially much larger market where giants like Amazon and Microsoft rule the roost.& &

Among the key updates unveiled by Oracle this week,& the opening of data centers in 12 new regions around the world that will help its international expansion.&

"While Oracle’s cloud progress remains a point of investor debate, we can observe the ongoing license strength which should underpin reported numbers in the coming quarters," Barclays wrote.&

Oracle's stock is trading about 9% below its 52-week high and& finished Tuesday's regular session up less than 1% at $48.49. Barclays, which maintained its "overweight" rating for Oracle's stock, has a $56 price target on Oracle.

SEE ALSO:& Oracle is making a massive investment in 12 new data centers to gain ground on Amazon in the cloud wars

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