Measured by Ebitda, analyst David Novosel of Gimme Credit writes that Oracle's (NASDAQ:ORCL) leverage ratio should improve as 2011 goes on, dropping to 1 times from the 1.4 times in 2010.
Novosel said, “Revenue is increasing at a double digit pace, while margins are moving significantly upwards. Free cash flow is enormous and leverage is dropping.”
“Spreads of +55 on the 2019 issue are not overly attractive, but given the strong credit profile, we think these bonds would provide excellent stability should overall corporate spreads come under pressure.”
On a relative basis Novosel sees the bonds of Oracle becoming more attractive as the year goes on.
Oracle closed Tuesday at $33.16, gaining $0.60, or 1.86 percent.
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