Oracle – Back to Basics – Trading at Jan 2007 levels. (You can ignore the details and instead move to take-away part)

(News From reuter, graph above)

12th Jan 2007
The stock price had started to descend from its recent peak of $17.82 on 9th June 07
Analyst downgraded the stock from outperform to perform when stock was trading at $17.5
The declining trend which had begun on 10th June just continued. Hence, The stock prices descend had begun before the analyst projection. Market realized the stock had reached its recent peak. However, the stock continued to slide till Feb 27, 07 until there were reports on Oracle buying Hyperion.
These suggest market moves irrespective of analysts’ projections. The move is more due to the recent events.

Mid – March 07
The stock prices was ascending from its recent low of 16.29 and it reached its high for the recent period to 18.57
Analyst upgraded the stock to "Buy", on the day, when stock was trading at $18.85
The stock continued to hover around this value, in fact it continued to increase
Here, when stock had started its ascend the analyst report upgraded it to buy. Now, the interesting aspect is that during this period the more prominent trend is the NASDAQ trend and also the news that Oracle reports earning in line with expectations.
Nov 14th 2007
The stock prices reflects the trend of the NASDAQ and it is oscillating around $19-$22, with its recent low of 19.44
Anayst Upgraded to Buy, the stock price declined immediately, reflecting NASDAQ trend and then started an upward trend.

Here again, the buy was not given at the lowest price but when the price started to increase, though the price of stock after a brief decrease after the analysts call. However, the trend seems to reflect the NASDAQ trend. But, at its high there was no recommendation to sell. Also, this was the time when the Bea buyout issue was at its peak. Also, the increase from Nov was also reflection of some of the positive guidance from Oracle on its earnings. Therefore, analyst contribution is questionable to the market outperformance. The stock price on Oct 10 2007 reached to peak of around $22.9, this was a day after Oracle acquired Logic Apps, while when Oracle bought the stocks was valued at 20.11 on Jan 16th. Let’s see the percentage change on stocks on these two days :

On the news – Dec 19,

Oracle issues Q3 guidance in line with expectations and the stock moves upward, while when the results were released stocks plummeted. The reason was that the sales growth for new license was 16%, while in its projection it had estimated the range to lie in between 15-25%. Though its on lower end. Its interesting Market was optimistic for higher end sales growth.

Mar 08
The stock price was down to $19.43 and it was oscillating from its peak of Dec
Downgrade to hold from buy

Share buy-back news almost always increases the share price. In two years of 07 and 08, inspite of obvious economic downturn Oracle shares reached its high of 23.52 in August 08 and then it followed the falling trend and within 4 months it has decreased to value as low below Jan 07 17.22. Leaving aside any financial analysis, the behaviour does gives certain hints how market responds. The interesting observation is there was no evident analysis recommending sell to the Oracle stock. This to me seems those analysts are conservative towards companies which don’t have any wrong news or which are better in the market might be conservative in bearish market.