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Investing.com - BMO Capital has raised its price target on Oracle (NYSE:ORCL) to $245.00 from $235.00 while maintaining an Outperform rating on the stock. The company, currently valued at $623 billion, has shown remarkable momentum with a 54.5% return over the past year and is trading near its 52-week high of $228.22. According to InvestingPro analysis, the stock appears to be trading above its Fair Value.
The research firm cited Oracle’s capital expenditure requirements and their impact on free cash flow as key factors in the decision. BMO Capital noted that these capital requirements, along with ongoing dividend payments and likely share buybacks, could necessitate new capital raising. InvestingPro data reveals that Oracle’s short-term obligations currently exceed its liquid assets, with a current ratio of 0.75, though the company has maintained dividend increases for 11 consecutive years.
According to BMO Capital, Oracle will "likely need to raise new capital in FY26 and/or FY27" to meet these financial obligations. While the firm believes this process is "manageable," it cautioned that a new capital raise "could have some negative impact on EPS."
Despite these concerns, BMO Capital made only "modest changes" to its estimates for Oracle, ultimately deciding to increase its target price while maintaining its positive outlook on the stock.
The firm reaffirmed its Outperform rating on Oracle shares, suggesting continued confidence in the company’s overall business trajectory despite the potential need for additional capital in the coming fiscal years.
In other recent news, Oracle has made significant strides with new agreements and analyst evaluations. The company disclosed in a Form 8-K filing that it has signed a cloud service agreement expected to generate over $30 billion in annual revenue starting in fiscal year 2028, marking the largest deal in Oracle’s history. This development has led TD Cowen to raise its price target for Oracle to $250, maintaining a Buy rating. Citizens JMP also reiterated a Market Outperform rating with a $240 price target, reflecting confidence in Oracle’s growth trajectory with these new agreements.
Additionally, DA Davidson increased its price target to $220, while maintaining a Neutral rating, in light of the significant cloud service agreement, which is believed to be with ByteDance. William Blair has reiterated an Outperform rating, emphasizing Oracle’s strong position in the database market and its multicloud deployment capabilities. Furthermore, talks have revived regarding a potential sale of TikTok’s U.S. operations involving an Oracle-Blackstone consortium, although these discussions remain contingent on approval from the Chinese government. These recent developments underscore Oracle’s expanding influence in cloud services and its strategic positioning in the tech industry.
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