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Investing.com - UBS lowered its price target on Oracle (NYSE:ORCL) to $325.00 from $380.00 while maintaining a Buy rating, citing concerns about the timing of backlog conversion to revenue. Oracle currently trades at $191.96, with a notably high P/E ratio of 51.3, significantly above the software industry average.
Oracle reported second-quarter results with 13% constant currency revenue growth and 66% cloud infrastructure growth, slightly below investor expectations. The company’s total revenue growth of 13% was in line with estimates but up from 9% a year ago, with annual revenue reaching $61.02 billion.
UBS analyst Karl Keirstead noted that unlike three months ago, Oracle’s stock is not responding positively to incremental backlog growth, despite a material $68 billion increase in remaining performance obligations during the quarter, driven by deals with Meta and Nvidia. InvestingPro data shows Oracle’s share price has fallen significantly over the last three months, despite a 26.93% six-month price return.
The company’s SaaS (Software as a Service) growth of 11% fell short of Oracle’s guidance for acceleration, while cloud infrastructure growth of 66% was slightly below UBS’s 68% estimate. Oracle’s third-quarter guidance for 37-41% cloud revenue growth also came in below UBS’s 42% estimate.
Despite these concerns, UBS maintained its Buy rating, citing the "compelling" potential conversion of Oracle’s massive $523 billion deal backlog to high revenue growth in the second half of fiscal year 2027. Analyst targets for Oracle range from $175.14 to $400, reflecting mixed opinions on the stock’s valuation. InvestingPro analysis suggests Oracle is currently slightly undervalued, with additional ProTips available to subscribers who want deeper insights into this prominent software player’s financial health.
In other recent news, Oracle reported its fiscal second-quarter 2026 earnings, which showed mixed results. While some key metrics such as Remaining Performance Obligation (RPO), Cloud Revenue, and Oracle Cloud Infrastructure (OCI) exceeded consensus estimates, the overall top-line performance missed expectations. This has led several analyst firms to adjust their price targets for Oracle. DA Davidson lowered its price target to $180, citing the earnings miss and concerns over profitability. KeyBanc also reduced its price target to $300, describing the quarterly results as disappointing despite Oracle’s promising future prospects. TD Cowen adjusted its price target to $350, highlighting mixed results in the SaaS and Software segments but noting OCI’s acceleration as a positive aspect. Additionally, Oracle has expanded its Oracle Database@Google Cloud service to Canada, enhancing its multicloud offerings in the North America-Northeast 1 and 2 Google Cloud regions. This expansion aims to support Canadian organizations with data residency requirements and integration capabilities.
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