UBS Upgrades PeopleSoft, Oracle to 'Buy'

Analyst Heather Bellini sees stronger license revenues for top application-software makers, and thinks a lift in packaged software may boost Oracle

UBS Financial upgraded PeopleSoft (PSFT ) Oracle (ORCL ) to buy from neutral.

Analyst Heather Bellini says it's possible that certain application-software companies could see faster acceleration in license revenue than many infrastructure-software companies. She thinks rival SAP fits this thesis well; she favors SAP and PeopleSoft.

Bellini notes Oracle, while predominantly an infrastructure-software company, should also benefit from an uptick in packaged applications. She continues to be concerned with competitor Siebel on a secular basis, as competition from software-suite vendors accelerates. Bellini raised the $22.50 PeopleSoft target to $23, and upped the $12.50 Oracle target to $14.75.

PeopleSoft shares have advanced in recent months, after Oracle launched a $7.3 billion hostile takeover bid for the company in June. However, Oracle said in November that it may have to drop its bid if PeopleSoft's customer-rebate program, which is designed to complicate any takeover offer, gets too expensive.

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