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On Tuesday, BMO Capital Markets adjusted its outlook on Oracle Corporation (NYSE:ORCL), reducing the tech giant’s price target from $205.00 to $175.00, while maintaining a Market Perform rating on the stock. The adjustment comes as Oracle, with its substantial market capitalization of $407 billion and trailing twelve-month revenue of $54.9 billion, maintains its position as a prominent player in the software industry. According to InvestingPro analysis, the stock has experienced a 10.5% decline year-to-date, though it maintains a GOOD overall financial health score. Keith Bachman, an analyst at BMO Capital, cited a good longer-term trajectory for Oracle, despite the lowered fiscal year 2026 estimates and price target.
Bachman’s analysis suggests that while Oracle’s FY26 revenue growth projections are slightly below the company’s guidance, at 13.5% year-over-year compared to the anticipated ~15% year-over-year, the overall bias towards the company remains positive. This growth trajectory builds upon Oracle’s current performance, with InvestingPro data showing a robust gross profit margin of 71.3% and strong EBITDA of $22.3 billion. InvestingPro subscribers have access to over 10 additional key insights about Oracle’s valuation and growth prospects. The analyst pointed out that the revised FY26 margin expectations were anticipated due to increased depreciation, and thus the recent commentary on FY26 margins is perceived more as a clarification rather than a concern.
The report also indicates that the future margins for FY27 are still uncertain, and BMO Capital has not yet published any estimates for that period. Bachman emphasized that the forthcoming FY27 figures could potentially influence their stance on Oracle.
Despite the reduction in the price target, BMO Capital’s Market Perform rating suggests a neutral perspective on the stock’s potential performance. The firm’s analysis acknowledges Oracle’s positive trajectory over a longer term, even as it adjusts expectations for the near future.
Oracle’s stock price will continue to be monitored by investors as the company progresses towards its FY26 and FY27 goals, and as market analysts like BMO Capital provide updates and insights based on the company’s financial outlook and performance. For investors seeking comprehensive analysis, InvestingPro offers a detailed research report on Oracle, part of its coverage of over 1,400 US stocks, providing essential metrics and expert insights for informed investment decisions.
In other recent news, Oracle Corporation reported its fiscal third-quarter results for 2025, showcasing significant growth in its Oracle Cloud Infrastructure (OCI) and Remaining Performance Obligations (RPO), which increased by 51% and 63% year-over-year, respectively. Despite these gains, Oracle’s revenue of $14.13 billion fell short of the consensus forecast of $14.39 billion, and its non-GAAP earnings per share (EPS) of $1.47 missed the consensus estimate of $1.49. The company anticipates a 15% revenue growth for fiscal year 2026, with potential acceleration to 20% by fiscal year 2027, supported by strategic initiatives like expanding data center capacity and new Stargate contracts.
Analyst firms have responded to Oracle’s mixed financial performance with various ratings adjustments. Oppenheimer maintained a Perform rating, while BofA Securities reduced its price target to $175 from $195, citing uncertainties in revenue reacceleration. DA Davidson reiterated a neutral rating with a $150 target, emphasizing Oracle’s stable outlook despite recent revenue shortfalls. Evercore ISI adjusted its price target to $185 from $200, maintaining an Outperform rating, and highlighted the company’s strong RPO figures and OCI demand. Meanwhile, JMP Securities sustained a Market Underperform rating with a $205 target, pointing out Oracle’s underwhelming financial results despite strong bookings.
Oracle’s management has revised its revenue growth forecast upward for fiscal year 2027, but also anticipates a compression in operating margins due to investments in OCI growth. This margin compression is expected to be more pronounced than previously forecasted. Despite these challenges, Oracle’s strategic focus on cloud infrastructure and data center expansion is expected to drive future growth. The company’s performance continues to be closely monitored by investors as it navigates these developments in the competitive tech landscape.
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