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Morgan Stanley (NYSE:MS) reiterated its Equalweight rating and $175.00 price target on Oracle (NYSE:ORCL) Thursday, following the company’s fourth-quarter results and ambitious fiscal 2026 guidance. The company, currently valued at $494.6 billion, trades at a P/E ratio of 40.4x and commands premium valuation multiples across key metrics, according to InvestingPro data.
Oracle management projected that remaining performance obligation (RPO) would grow over 100% in fiscal 2026, Oracle Cloud Infrastructure would accelerate from 50% to more than 70% year-over-year, and overall cloud revenue would jump from 24% to more than 40%. These targets would put Oracle on track to reach approximately $280 billion in backlog by the end of fiscal 2026. With current annual revenue of $55.8 billion and an EBITDA of $22.9 billion, these growth projections represent significant expansion potential. Dive deeper into Oracle’s growth metrics with InvestingPro, which offers 12+ additional exclusive insights about the company’s valuation and prospects.
The fourth-quarter results showed mixed signals, with RPO increasing just $8 billion or 6% quarter-over-quarter, below the five-year average of 17%. Oracle’s database revenues from Amazon (NASDAQ:AMZN), Google (NASDAQ:GOOGL) and Azure grew 115% quarter-over-quarter, reflecting increased capacity and solution attractiveness.
Strategic software-as-a-service offerings showed strengthening growth, with Fusion Cloud ERP up 22% year-over-year and NetSuite Cloud ERP up 18% year-over-year. Oracle plans to open an additional 47 Multicloud Datacenters over the next 12 months, expanding from the current 23 locations.
Morgan Stanley noted that if Oracle achieves its $104 billion fiscal 2029 revenue target, the company could potentially deliver $12 in earnings per share, which would support a valuation closer to $230 per share compared to current levels.
In other recent news, Oracle reported its fourth-quarter results for fiscal year 2025, showing strong growth across its cloud offerings. The company exceeded market expectations with its fiscal year 2026 outlook, indicating significant acceleration in bookings and revenue growth. Oracle’s total cloud subscription growth reached 27% in the fourth quarter, surpassing some analysts’ expectations. The company plans to increase capital expenditures to $25 billion in fiscal year 2026, reflecting efforts to meet growing infrastructure demand, particularly in cloud and AI initiatives.
Several firms have adjusted their price targets for Oracle following these results. BofA Securities raised its price target to $220 while maintaining a Neutral rating, noting Oracle’s strong performance in its SaaS business. JPMorgan also raised its price target to $185, citing Oracle’s cloud revenue growth and bullish future projections. Wolfe Research increased its target to $215, highlighting Oracle’s strong fiscal 2026 guidance and substantial RPO growth.
Despite these positive developments, analysts have noted challenges, such as increased capital expenditures and potential impacts on free cash flow. Stifel raised its price target to $180, emphasizing Oracle’s cloud growth but also noting the increased costs associated with this expansion. Overall, Oracle’s recent financial performance and future guidance have prompted a positive response from analysts, although some maintain a cautious outlook due to valuation and expenditure concerns.
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