ORCL, SAP: Get Ready for Analytics Smackdown, Says Nomura

Nomura Equity Research’s Rick Sherlund reiterates a Buy rating and a $32 price target on shares of Oracle (ORCL), writing that the company is about to have a “cage fight” with competitor SAP (SAP) over the future of the database market.

The subject is Oracle’s “Exalytics” integrated hardware and software “appliance,” and SAP’s in-memory database called “Hana,” which seems lately to be�receiving an increasing number of plaudits from the Street.

The two are competing for business in the market for data analytics, which is becoming one of the hotter areas of the “Big Data” craze.

“Over the next two months, we expect three events to provide both Oracle and SAP forums to highlight their new solutions while attacking their competitor�s solutions,” writes Sherlund.

First comes Oracle’s Exalytics briefing on April 4th; then comes SAP’s press event with its CTO on April 10th; and then comes SAP’s “Sapphire Now” user conference in Orlando, Florida on May 14th and 16th.

As Sherlund describes the substance of the confrontation:

Larry Ellison took on SAP�s HANA product as not a worthy competitor in the production database market, saying it is for business analytics, which has been true [�] We are not convinced of HANA in the production database market, but optimistic about both companies� products to address robust growth markets in analytics, BW and for a new generation of real-time applications.

Sherlund thinks SAP, whose shares he also rates a Buy, is going to use Hana to try and slap down Oracle at a moment of perceived weakness in Oracle’s software sales:

For years Larry Ellison has kicked sand in the face of SAP whenever possible, and SAP appears to be enjoying their success with HANA and the opportunity to push back when Oracle results appear weak. We believe SAP is likely having another good quarter, so ??we might want to add their earnings call in late April to the list of opportunities to tweek Oracle yet again. Oracle had a difficult comparison with its apps in Europe and showed a 20% y/y decline as a result, so this may be the setup for a jab at Oracle in both the applications and the database market.

Previously: Oracle: MKM Starts at Buy; Street Sighs Relief on FYQ3, March 21st, 2012.

Fin