On Tuesday, CFRA, a financial research firm, updated its assessment of Oracle Corporation (NYSE:ORCL), increasing the 12-month price target to $189 from the previous $172. The firm maintained its Hold rating on the stock. According to InvestingPro data, Oracle's stock has delivered impressive returns, surging over 82% year-to-date and showing strong momentum despite trading above its Fair Value.
The revised target is based on a consistent forward price-to-earnings (P/E) ratio of 25 times, but now takes into account the updated calendar year 2026 earnings per share (EPS) estimate of $7.55. This EPS projection sits above the company's historical average but below that of its industry peers.
CFRA's forecasts for Oracle's fiscal year 2025 (ending in May) EPS remains unchanged at $6.29, with fiscal year 2026 anticipated to see an EPS of $7.16.
Oracle recently reported its November quarter EPS at $1.47, which was slightly below the consensus estimate of $1.48. Sales increased by 9%, which aligned with CFRA's projections, driven by a 24% surge in cloud revenue, now accounting for 42% of total sales. With total revenue reaching $54.93 billion and an impressive gross profit margin of 71.26%, Oracle maintains its position as a dominant player in the software industry.
InvestingPro subscribers have access to over 15 additional key insights about Oracle's financial health and market position. However, licensing remained stagnant, and there was a decline in hardware and software sales.
Oracle's cloud segment showed significant growth, with Infrastructure as a Service (IaaS) revenues climbing by 52%, marking an acceleration from the 45% growth observed in the previous quarter and 42% in the quarter before that. CFRA expects this growth trajectory to continue, supported by increased capacity and the expansion of the Blackwell product range through the calendar year 2025. The Cloud Application ( Software (ETR:SOWGn) as a Service or SaaS) segment also reported a 10% increase, with robust performance from NetSuite and Fusion products, up 20% and 18%, respectively. The transition towards Agentic AI is anticipated to introduce new artificial intelligence use cases and potential upside.
Despite these positive developments, CFRA expressed caution due to Oracle's high net debt position, which stands at $77 billion, and significant cash usage, with free cash flow (FCF) at negative $2.7 billion after accounting for $4 billion in capital expenditures. These factors are seen as potential constraints on the company's ability to expand its valuation multiple.
Looking ahead, Oracle's guidance for the February quarter anticipates sales growth of around 10%, aligning with CFRA's expectations. Additionally, the company's reported performance obligations (RPO) increased by 49%, which provides visibility into future revenues.
InvestingPro's comprehensive analysis, including detailed financial health metrics and exclusive Pro Research Reports, offers investors deeper insights into Oracle's growth trajectory and market position among the 1,400+ top US stocks covered by the platform.
In other recent news, Oracle Corporation has been the focus of various analyst firms following its recent earnings and revenue results.
TD Cowen reaffirmed a Buy rating on Oracle, citing a solid Q2 with 9% revenue growth. The firm also noted a significant 52% growth in Oracle Cloud Infrastructure (OCI), surpassing analyst estimates. However, a decline in Remaining Performance Obligations (RPO) was noted, which did not meet market expectations.
Analysts at Stifel raised their price target for Oracle following the company's reaffirmation of its commitment to doubling its capital expenditure to approximately $15 billion and anticipating over 50% growth in its Cloud segment for the fiscal year 2025. BMO Capital Markets also increased its price target for Oracle, highlighting a 50% year-over-year growth in Cloud Current Remaining Performance Obligations (CRPO) and a 21% increase in Cloud Revenue Performance Obligations (RPO).
RBC Capital maintained its Sector Perform rating for Oracle, despite mixed financial results. The firm acknowledged strength in the company's third-quarter revenue and earnings per share on a constant currency basis, while showing skepticism towards the company's ambitious plans for cloud growth.
Finally, Piper Sandler raised its price target for Oracle, pointing out a robust growth in the company's cloud revenue performance obligations and expressing confidence in the potential shift from a multi-quarter to a multi-year growth acceleration.
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