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On Wednesday, Citi analysts adjusted their outlook on Oracle (NYSE:ORCL) shares, reducing the price target to $160 from the previous $194, while maintaining a Neutral rating on the stock. Currently trading at $144.18, Oracle shares have declined over 10% in the past week, according to InvestingPro data. Oracle’s third fiscal quarter results revealed a mixed performance, as revenue fell short of expectations. The slower-than-anticipated growth of Oracle Cloud Infrastructure (OCI) and additional foreign exchange headwinds were primary factors behind the revenue shortfall for the quarter.
Despite the revenue miss, Oracle’s Remaining Performance Obligations (RPO), which reflect future revenue that is contracted but not yet recognized, continued to show robust growth, surging 63% year-over-year on a constant currency basis. The company’s trailing twelve-month revenue reached $55.78 billion, showing a 6.23% growth rate. This growth in bookings was not solely due to the expected contributions from the Stargate deal, which has yet to impact the quarter’s figures, indicating a broader strength in bookings.
Oracle has been facing challenges due to capacity constraints linked to component delays, which have affected its fourth-quarter guidance. However, these constraints are expected to alleviate heading into fiscal year 2026, with the company’s overall outlook remaining largely unchanged. Management has expressed increased confidence in the growth trajectory of OCI, raising the revenue guidance for fiscal year 2027 to exceed 20%.
The moderation in Citi’s estimates is attributed to the slower cloud ramp-up, which led to the reduction in the price target. Trading at a P/E ratio of 34.12x and showing high valuation multiples across key metrics, InvestingPro analysis suggests Oracle is currently overvalued. Despite Oracle’s impressive bookings data, Citi analysts pointed out ongoing concerns regarding the conversion of revenue and margin uncertainties related to OCI. These factors, according to the analysts, could limit the potential for positive revisions in the stock’s outlook. For deeper insights into Oracle’s valuation and growth prospects, investors can access the comprehensive Pro Research Report, available exclusively on InvestingPro, along with 13 additional ProTips and extensive financial metrics.
In other recent news, Oracle has been the focus of multiple analyst updates following its latest financial disclosures. Oracle reported a notable increase in Remaining Performance Obligations (RPO), with a 63% year-over-year growth in constant currency terms, reaching over $130 billion. However, the company faced challenges with a slight revenue miss in its fiscal third quarter of 2025, though adjusted earnings per share met expectations. Analysts from Cantor Fitzgerald and Stifel revised their price targets for Oracle, lowering them to $175 and $150, respectively, citing factors like supply constraints and increased capital expenditures.
Piper Sandler also adjusted its price target to $190, acknowledging Oracle’s increased RPO backlog and capital expenditure plans. Despite these adjustments, TD Cowen maintained a Buy rating and a $210 price target, emphasizing the strong demand environment suggested by Oracle’s RPO figures. Oracle’s management has set ambitious revenue growth targets of approximately 15% for fiscal year 2026 and about 20% for fiscal year 2027. These projections are supported by Oracle’s strategic focus on cloud services and artificial intelligence infrastructure. Analysts remain optimistic about Oracle’s potential for sustained expansion, with some viewing current stock price dips as potential buying opportunities.
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