Guggenheim maintains Oracle stock Buy rating, $220 target

Published 03/04/2025, 12:04
Guggenheim maintains Oracle stock Buy rating, $220 target

On Thursday, Guggenheim reiterated its Buy rating on Oracle Corporation (NYSE:ORCL) with a price target of $220.00, representing potential upside from the current price of $145.86. According to InvestingPro data, Oracle’s stock is currently trading above its Fair Value, with a P/E ratio of 33.17x and strong market capitalization of $409 billion. Analysts from the firm attended Oracle’s 2025 Financial Analyst Summit in Salt Lake City, where Executive Vice President of Oracle Cloud Infrastructure (OCI) Clay Magouyrk and his team presented the company’s Infrastructure-as-a-Service (IaaS) strategy. They highlighted Oracle’s technology differentiation, which has positioned it as a preferred platform for AI workloads.

During the event, the Guggenheim team also had the opportunity to engage with Senior Vice President of Investor Relations, Ken Bond. The discussions revealed a strong investor interest in Oracle’s AI business segment, which has experienced significant growth. This growth is reflected in Oracle’s robust financial performance, with revenue reaching $55.78 billion in the last twelve months and an impressive gross profit margin of 71.12%. Analysts noted that despite the lower margin associated with AI training, the business remains comfortably profitable, and any incremental growth in this area is expected to contribute to Oracle’s overall profit.

The analysts emphasized Oracle’s competitive edge in AI training workloads, suggesting that the company’s cloud infrastructure offers superior performance, pricing, security, and reliability for a wide range of enterprise cloud applications. InvestingPro analysis shows Oracle’s strong market position, with revenue growing at 6.23% and maintaining consistent dividend payments for 17 consecutive years. Drawing parallels to Oracle’s past successes with its Real Application Clusters (RAC) technology, which drove the company’s stock for nearly a decade, the analysts expressed confidence in Oracle’s potential to disrupt the market with its current offerings.

The Guggenheim team concluded that Oracle’s stock, which they consider their "Best Idea," is poised for continued growth. They believe that while the summit marked a significant moment, Oracle’s stock has much more potential before reaching its peak, affirming their strong endorsement with a $220 price target. For deeper insights into Oracle’s valuation and growth prospects, InvestingPro subscribers can access 12 additional exclusive ProTips and comprehensive financial analysis through the Pro Research Report.

In other recent news, Oracle Corporation has disclosed a second cybersecurity breach within a month, involving the theft of old client log-in credentials. This breach has triggered an investigation by the FBI and cybersecurity firm CrowdStrike Holdings (NASDAQ:CRWD) Inc. In another development, Oracle is part of a consortium of American investors, including Andreessen Horowitz, aiming to acquire TikTok’s U.S. operations from ByteDance. This move is part of efforts to separate TikTok from its Chinese ownership amid regulatory concerns. Additionally, Oracle’s software project with the U.S. Department of Defense has been canceled as part of the Pentagon’s cost-cutting measures. The project was initially selected to manage the Pentagon’s civilian workforce but faced significant delays and budget overruns. Furthermore, Oracle continues to play a role in the proposed acquisition of TikTok’s U.S. operations, ensuring data management to prevent access from China. These recent developments highlight Oracle’s ongoing challenges and strategic moves in cybersecurity and international business dealings.

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