Uxin shares drop 45% as predicted by InvestingPro’s Fair Value model
Investing.com - Deutsche Bank reiterated its Buy rating on Oracle (NYSE:ORCL) with a price target of $375.00 on Wednesday, representing an 83% upside from the current price of $204.87. This bullish stance comes despite Oracle’s stock dropping 12.64% over the past week, with InvestingPro data indicating the stock is currently in oversold territory.
The research firm conducted a deeper analysis of Oracle’s relationship with OpenAI following recent share price declines and industry concerns about AI capacity commitments and capital expenditure plans.
Deutsche Bank’s long-term forecast suggests that without OpenAI-related revenues and incremental expenses, Oracle could see a $4 reduction in earnings per share to $17 and a $10 billion reduction in free cash flow to $31 billion by fiscal year 2030 compared to company guidance.
The analysis indicates Oracle is receiving little if any credit for its OpenAI business at the current share price of approximately $200, based on discounting these projected numbers to present value. According to InvestingPro, Oracle is trading at a P/E ratio of 45.12, reflecting high growth expectations, with analyst price targets ranging from $175 to $430.
Deutsche Bank acknowledged concerns about Oracle’s long-lived lease obligations but noted there is "a good deal of flexibility/fungibility around these leases," adding that even if burdened with approximately 50% of estimated lease expenses related to foregone OpenAI business, Oracle would still achieve earnings per share of approximately $15 and free cash flow of approximately $26 billion. With Oracle’s next earnings report due in 19 days (December 15), investors will gain further clarity on the company’s financial trajectory and AI strategy. InvestingPro offers a comprehensive research report on Oracle, one of 1,400+ US equities covered with deep-dive analysis and actionable insights.
In other recent news, Oracle’s earnings report highlighted a significant development as DA Davidson lowered its price target for Oracle to $200 from $300, maintaining a Neutral rating. The adjustment was attributed to concerns over Oracle’s reliance on OpenAI, which has been a factor in the company’s reported increase in remaining performance obligations. Additionally, Oracle has expanded its board of directors by electing Stephen Rusckowski, former CEO of Quest Diagnostics, bringing the total number of board members to 14. In a strategic move, Oracle Health Information Network has been designated as a Qualified Health Information Network under the Trusted Exchange Framework and Common Agreement, allowing seamless health data exchange across various entities.
Furthermore, Oracle was mentioned in a Bank of America report regarding the significant debt issuance by major technology hyperscalers, including Oracle, which collectively issued $121 billion in investment-grade debt this year. The report also highlighted Oracle’s involvement in multi-year cloud agreements with OpenAI, alongside other major tech companies like Google and Amazon. These recent developments reflect Oracle’s active engagement in expanding its board, enhancing its health information network capabilities, and participating in substantial financial activities within the tech industry.
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