Oracle Corp. (Nasdaq: ORCL) shares keep rolling along, gaining another 4 5/16 to a 52-week high of 102, even though Edward Jones downgraded the database software developer Wednesday.
Analyst Art Russell cut the stock from a "strong buy" to a "buy" recommendation, solely on the stock's valuation. Oracle is trading at a price-to-earnings ratio of 102.
In a research note, Russell said the stock had surged 258 percent year to date and was trading at 71 times his fiscal 2001 earnings estimate of $1.46 a share.
"We continue to feel Oracle is well positioned to capitalize on what we feel will be a post-Y2K spending boom in enterprise software, but at current prices the stock is getting much closer to being fully valued," he said in a research note. "After being under-appreciated relative to their role in this new age for the past couple of years, investors have jumped head first on to the ORCL bandwagon. New money should dollar cost average."
In its second quarter, Oracle easily beat analysts' estimates, earning $384 million, or 26 cents a share, on sales of $2.3 billion.
First Call consensus expects it to earn 27 cents a share in its third quarter and $1.14 a share in the fiscal year.
Oracle also announced a 2-for-1 stock split on the heels of its impressive second-quarter earnings report.
Its shares hit a 52-week low of 21 in April.
Thirty-two of the 35 analysts following the stock maintain either a "buy" or "strong buy" recommendation.