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On Tuesday, BofA Securities revised its price target for Oracle Corporation (NYSE:ORCL) shares, reducing it to $175 from the previous target of $195. The firm maintained its Neutral rating on the stock. Currently trading at $148.79, Oracle has seen its stock decline by 10.49% year-to-date, according to InvestingPro data. BofA Securities highlighted that while they anticipate Oracle’s total cloud growth to contribute to a positive revenue trend, the extent of the expected reacceleration remains uncertain due to the company’s dependence on database migration deals and GPU rentals.
The analysts at BofA Securities pointed to operating income growth as a useful indicator for assessing Oracle’s performance, similar to the approach used for hyperscale companies. With current revenue of $54.93 billion and a revenue growth rate of 6.4% over the last twelve months, they noted that the forecasted operating income growth of 8% for fiscal year 2026 and 13% for fiscal year 2027 does not present a strong argument for the return on investment (ROI) on capital expenditures, which are projected to increase by 12% and 10%, respectively, in their model.InvestingPro analysis reveals 13 additional key insights about Oracle’s financial health and market position. Subscribers gain access to comprehensive valuation metrics and expert analysis through the Pro Research Report, available for over 1,400 US stocks.
The decision to adjust the price objective was influenced by a slowdown in the growth of contracted remaining performance obligations (cRPO) and increasing margin pressure. BofA Securities set the new price target at 26 times the estimated earnings per share (EPS) for calendar year 2026, a decrease from the previous multiple of 28 times. Despite this adjustment, the firm’s valuation still represents a premium over the S&P 500’s average of 18.5 times EPS, reflecting the potential for revenue reacceleration in the long term.
In other recent news, Oracle Corporation reported its third-quarter fiscal year 2025 earnings, revealing a slight miss on both earnings per share (EPS) and revenue forecasts. The company posted an EPS of $1.47, just below the forecasted $1.49, and reported revenues of $14.1 billion, falling short of the anticipated $14.39 billion. Despite these misses, Oracle’s strategic focus on cloud and AI infrastructure has positioned it well, with total cloud revenues rising by 25% year-over-year. Evercore ISI analysts reduced Oracle’s price target to $185 from $200, maintaining an Outperform rating, citing mixed financial results but noting Oracle’s significant beat in Remaining Performance Obligations (RPO), which reached $130 billion, surpassing expectations.
KeyBanc Capital Markets reiterated an Overweight rating on Oracle with a $200 price target, highlighting the company’s substantial RPO growth and raised growth expectations for fiscal years 2026 and 2027. DA Davidson maintained a neutral rating on Oracle, with a $150 price target, noting a shortfall in revenue expectations but acknowledging the management’s confident outlook for future growth. JMP Securities sustained its Market Underperform rating and $205 price target, observing Oracle’s mixed third-quarter results but acknowledging the company’s strongest bookings quarter to date. Oracle’s management anticipates a 15% revenue increase in the upcoming fiscal year, supported by strategic initiatives, including the expansion of data center capacity and new contracts.
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