Jim Cramer is no stranger to what causes the constant ups-and-downs that dictate the stock market, and is quick to see an opportunity when it arises.
The CNBC pundit told subscribers of his CNBC investing club on Sept. 12 that he thought that the sell-off of shares in Oracle (ORCL) -) is “overdone and a clear-cut buying opportunity” after the Silicon Valley mainstay reported mixed fiscal first-quarter results the day before.
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While Oracle’s earnings-per share exceeded expectations in the three months before Aug. 31, revenues came slightly short of investor’s expectations. However, the software giant reported growth in its cloud-computing services; enough for Cramer to recommend the stock as a buy.
“It’s killing me that we can’t buy,” said Cramer, referring to rules that prevent him from trading stocks he mentions on CNBC.
A combination of factors led to the initial sell-off, which included UBS and Barclay’s elevation of Oracle shares to buy-equivalent ratings and the the stock’s growth of about 9% over the past two weeks - which can be a perfect setup to sell in the wake of any mention of bad news.
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Oracle recently acquired electronic medical records firm Cerner in a $28 billion acquisition, whose purchase can also be attributed to the sell-off. Oracle CEO Safra Catz noted in the earnings call on Monday that Cerner's role in painting an unpretty picture can be due to how they report revenue, as they sell their software through a subscription-based model, rather than clients purchasing licenses - which can be interpreted differently to investors.
Cramer noted that investors saw Cerner's role in dampening company-wide earnings, but stated “anybody who thinks that this is because of a slowdown in the cloud is really a fool."
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