Oracle Corp’s Stock Price


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Essay #: 068630
Total text length is 3,794 characters (approximately 2.6 pages).

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The beginning:
Oracle Corp’s Stock Price
(ORCL: US$34.75)
12-month target price: US$36.00
Upgrading to Strong Buy on Four-Year Growth Rate
We are upgrading Oracle Corp. to STRONG BUY as a result of analysis that suggests that Oracle’s stock has room to grow upwards over the remaining four years. Oracle expects a 15% annual growth rate for each of the remaining four years; Oracle’s stock does not reflect its long-term status as the world’s largest enterprise software company. Oracle has grown aggressively through acquisition, and its high-growth phase is expected to last for at least four or five more years. This period has the potential to offer substantial returns to investors.
Normalized EBIT = $13,104.00 Adjusted EBIT =...
The end: of Capital in Stable Phase =7.89%Value at the end of growth phase =$362,115.57
ValuationPresent Value of FCFF in high-growth phase = $66,807.05 Present Value of Terminal Value of Firm = $160,575.55 Value of operating assets of the firm = $227,382.60 Value of Cash, Marketable Securities & Non-operating assets = $23,637.00 Value of Firm = $251,019.60 Market Value of outstanding debt = $18,948.74 Market Value of Equity = $232,070.86 Value of Equity in Options = $2,706.93 Value of Equity in Common Stock = $229,363.93 Market Value of Equity/share =$45.64
DCF Calculation
Enterprise value: 168,800
Equity value: 172,614
Net debt: -3,814
Value of equity: 172,614
Shares outstanding: 5,060,000,000
Discount rate: 11%
Terminal growth: 3%
Tax: 30%