Merrill remains cautious on Oracle (ORCL ).
Analyst Christopher Shilakes says software stocks are under pressure due to the weak technology market, and concerns about the 2002 EPS outlook. He doesn't believe it is time for investors to "bargain hunt" given continuing concerns on EPS risk for bellwethers like Oracle. He remains concerned about the projected 50% sequential license growth for Oracle's fourth quarter.
He says departure of the senior vice president, Sebastian Gunningham, adds further concerns. Shilakes notes the June quarter typically is a seasonally difficult period. Near term, the sector's underperformance is likely to continue. Near term, he would buy BEA Systems, Mercury Interactive and Microsoft, particularly on weakness.