The S&P 500 dropped 5.1 percent, and the assets I predicted would do worse actually lost to the market. That was correct. In 24 of the last 34 weeks, I was correct.
Where should I go next? This week, I’m avoiding Oracle (ORCL 10.41%), Beyond Air (XAIR -1.36%), and other businesses in this space. Let’s look at my near-term concerns with both of these investments in detail.
One of the industry’s top enterprises software titans has fallen on hard times. It appears that there is a scarcity of the lofty expansion and Larry Ellison’s hubris these days, and we won’t have to wait long for new financials. Oracle releases its fourth-quarter financial results on Monday immediately following the market close.
Oracle’s growth has slowed. For the quarter, analysts predict revenue will rise 4% and 5% for the whole year. It’s not a fluke. Revenue should have increased by at least 5% in 11 consecutive years. And that’s not all; Oracle appears to be lacking in other areas, as well. The same company that was previously able to consistently satisfy expectations with market-shattering bottom-line results proved mortal last time around. It failed to meet Wall Street’s profit goal, and analysts are expecting a yearly decline in this week’s report.
The much smaller but still somewhat problematic company reporting its earnings this week is Beyond Air. The clinical-stage medical device firm is hoping for a successful rollout of its LungFit, a treatment device made for persistent pulmonary hypertension of newborns (or PPHN, for short). Last year, it encountered some regulatory delays, missing its target of an on-sale date in 2021.
Clinical trials have been largely successful, but Beyond Air is confronting a few issues. It established a chief medical officer position six months ago and has already had two executives in that post. Beyond Air has also had larger-than-predicted losses in its last three quarters, an ill omen for Thursday’s financial report. Despite having a cash-rich balance sheet, Beyond Air may have to raise more money at the worst possible time as the market weakens.