By Chris Ciaccia, TheStreet

Oracle (ORCL) CEO Larry Ellison is nothing if not brash. The company he leads could be as bright a star as he is, according to one analyst.

Canaccord Genuity analyst Richard Davis upgraded shares of the software giant to "buy" and raised his price target to $42 from $35. This was done ahead of Oracle's earnings, which are slated to be released next week. Davis cited an expected year-over-year increase in hardware revenue as one of the major reasons for the upgrade.

Another reason cited by Davis is Oracle's market valuation; the stock trades at just 11 times the analyst's projected earnings for 2013.

"We believe the combination of these factors could lead to a 1 multiple point expansion, and when this is added to a projected 9-11% full year EPS growth with relatively easy comparisons in the May and August quarters, you could see ORCL advance 20% within a year," Davis said in a report.

Margins are improving 

Others on Wall Street are also bullish on Oracle's current quarter. Analysts polled by Thomson Reuters forecast earnings of 66 cents a share on $9.4 billion in revenue. While revenue is only expected to grow 3.6% year over year, earnings are expected to grow 6%.

Analysts also expect that the company could report an increase in hardware revenue this quarter. On Oracle's most-recent earnings call, Ellison suggested that the hardware business would turn around this quarter, showing growth and margin improvement. Oracle has worked hard to expand its hardware business, in part via acquisitions such as its deal in 2010 for Sun Microsystems and, most recently, Acme Packet. If hardware turns the corner, that could boost Oracle's earnings multiple, Davis noted.

Software is another story, as Oracle still generates a majority of its revenue from middleware and database software, and has increased its presence in cloud computing to fend off competitors. 

Oracle competes with the likes of IBM (IBM), Workday (WDAY) and Salesforce.com (CRM) in the cloud and while rivals such as Salesforce and Workday may experience stronger growth over the next decade, neither is likely to eat Oracle's lunch anytime soon.

More deals to come 

As Oracle has become a more mature software company, it's had to make acquisitions to boost growth. That, and the complexity of some of its acquisitions, has caused the stock to trade at a discount to other software companies.

Oracle is likely to continue buying companies, especially given Davis' projection that the company will generate nearly $14 billion in operating cash flow this year. In the past, Oracle has bought a number of smaller companies in a particular space, not going after the leader. It's managed to effectively use this strategy by putting its strong sales force to work, selling assets that maybe aren't at the top of the sector.

With Ellison, 69, showing no signs of slowing down, Oracle seems poised to continue its ways of slow but steady growth.

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