3 Gloomy Predictions On The Oracle-NetSuite Deal

Doubts that Oracle Corporation ORCL's acquisition of NetSuite Inc N will be completed have increased intensely, and analysts have begun predicting the possible downtick in NetSuite share prices.

Following T. Rowe Price Associates' demand for an increased price of $133 a share for NetSuite, the hesitations toward the deal's completion has gained additional steam. D.A. Davidson believes that unless T. Rowe Price surrenders its shares, the deal will not be closed.

The brokerage said the business of NetSuite has already been facing uncertainty as customers were not ready to commit in the absence of clarity. Last week, the company indicated that it might not be able to achieve its early revenue objective of $955 million–$975 million for the fiscal year 2016.

On back of the uncertainty, the following three brokerages have provided their own gloomy predictions:

• D.A. Davidson downgraded NetSuite shares to Underperform with a target price of $73 on the stock. The firm noted that some executives have already left the company.
• Bank of America thinks that if the deal fails, NetSuite shares will drop down to $68. Analyst Kash Rangan believes there will not be any competing offers, and the decelerating fundamentals will not attract a higher bidding price.
• Macquarie expects possible downside pressure for NetSuite shares if Oracle fails to get enough tenders. The firm thinks that finding another suitor would not be an easy task for NetSuite.

At Last Check

• NetSuite was down 0.96 percent at $92.23.
• Oracle was down 0.16 percent at $38.36.