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On Tuesday, RBC Capital analysts adjusted their outlook on Oracle (NYSE:ORCL) shares, reducing the price target to $145 from the previous $165 while maintaining a Sector Perform rating. Oracle’s stock experienced a 4% decline in after-hours trading following the company’s earnings report. According to InvestingPro data, Oracle’s shares are trading at a P/E ratio of 36.37, suggesting a premium valuation relative to near-term earnings growth. The third-quarter revenue of Oracle fell short of expectations on a constant currency basis, primarily due to capacity constraints that affected the company’s performance.
Oracle’s reported 63% growth in Remaining Performance Obligations (RPO) was a highlight, though this was largely anticipated due to a significant deal with META (NASDAQ:META). However, this RPO growth did not include contributions from Stargate, a detail that the analysts noted. Despite the capacity issues, Oracle Cloud Infrastructure (OCI) growth was more resilient than RBC Capital had anticipated. The company’s overall revenue growth stands at 6.4% over the last twelve months, with InvestingPro analysis showing a strong financial health score of 3.94 for profitability.
The analysts expressed reservations about Oracle’s ability to significantly accelerate its growth in light of the ongoing capacity constraints. With these limitations in mind, RBC Capital views Oracle’s forecast of 15% revenue growth by fiscal year 2026 as optimistic. The firm suggests that the current risk/reward balance for Oracle’s stock is even, indicating a neutral stance on the company’s near-term prospects. For deeper insights into Oracle’s valuation and growth metrics, investors can access comprehensive analysis through InvestingPro, which offers exclusive access to over 30 additional key metrics and financial health indicators.
Oracle’s mixed quarterly report, coupled with the revised price target from RBC Capital, reflects the challenges the company faces in scaling its operations to meet demand. The firm’s analysis points to the need for Oracle to address its capacity constraints in order to achieve the ambitious revenue growth targets set by management.
In other recent news, Oracle Corporation has reported a mixed performance across its recent financial results and analyst evaluations. The company announced its fiscal third-quarter results for 2025, highlighting significant growth in bookings, with Oracle Cloud Infrastructure (OCI) and Remaining Performance Obligations (RPO) showing substantial year-over-year increases. Despite these positive indicators, Oracle’s earnings and revenue fell slightly below expectations, leading to adjustments in analyst price targets. BofA Securities and Evercore ISI both lowered their price targets for Oracle to $175 and $185, respectively, while maintaining their neutral and outperform ratings.
Oracle management has expressed optimism for future revenue growth, revising forecasts upward for fiscal year 2027 and projecting a 15% revenue increase in the upcoming fiscal year. However, the company faces challenges such as foreign exchange fluctuations and anticipated compression in operating margins due to heavy investment in OCI growth. DA Davidson maintained a neutral rating with a $150 price target, noting a shortfall in revenue expectations outside of OCI contributions.
Evercore ISI highlighted that Oracle’s RPO significantly exceeded projections, driven by strong demand for OCI, though cloud margins are expected to impact gross margins. BMO Capital also adjusted its price target to $175, citing a positive long-term trajectory despite lowered fiscal year 2026 estimates. Investors will continue to monitor Oracle’s progress as it navigates these developments and adjusts its strategies to support growth.
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