On Tuesday, KeyBanc Capital Markets sustained its Overweight rating on Oracle Corporation (NYSE:ORCL) with a steady price target of $200.00. The firm acknowledged Oracle's recent performance, noting a slight hiccup for a company that has set high expectations for itself. Despite this, KeyBanc remains optimistic about Oracle's future, particularly heading into 2025.
Oracle's Oracle Cloud Infrastructure (OCI) revenue experienced a 55% growth, with OCI consumption revenue increasing slightly to 58% from 56% in the previous quarter. However, this growth was anticipated and matched market expectations. The firm pointed out that in recent quarters, Oracle's Infrastructure as a Service (IaaS) and OCI have occasionally only met or missed estimates.
The report highlighted a difference in this quarter's results, as there was no simultaneous increase in remaining performance obligations (RPO), which had been the case in prior periods. While year-over-year RPO growth was strong, there was a sequential decline for the first time in over a year and only the second time since 2021.
Oracle's signing of a new AI deal with Meta (NASDAQ:META) in the early stages of the third quarter of fiscal year 2025 was seen as a positive move. Management at Oracle anticipates a strong rebound in RPO in the upcoming third quarter.
Despite the current results, KeyBanc remains confident in Oracle's growth trajectory, particularly in the second half of the year, with expectations of continued positive trends in operating margins and acceleration in OCI and the SaaS businesses.
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