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Investing.com - Stifel upgraded Oracle (NYSE:ORCL) from Hold to Buy on Monday, raising its price target to $250.00 from $180.00. The upgrade comes as Oracle’s stock has delivered an impressive 50.56% return over the past year, trading near its 52-week high of $216.93. According to InvestingPro data, the company commands a substantial market capitalization of $590.53 billion.
The upgrade comes as Stifel analyst Brad Reback cited Oracle’s recent dramatic increase in capital expenditure and RPO (Remaining Performance Obligation) gains, which support management’s growth expectations for the company’s Cloud Infrastructure and SaaS-Apps businesses. InvestingPro analysis shows Oracle maintaining strong momentum, with revenue growing at 8.38% over the last twelve months. For deeper insights into Oracle’s growth metrics and 19 additional expert tips, consider exploring InvestingPro’s comprehensive research report.
Stifel expects these cloud gains to generate accelerating total revenue increases in coming years, projecting approximately 16% growth in fiscal year 2026 and 20% in fiscal year 2027.
While the higher capital spending will lead to additional near-term gross-margin compression, Stifel noted that Oracle’s management team has demonstrated skill at managing expenses. The firm highlighted that in fiscal year 2025, Oracle’s headcount grew only 2% while total operating expenses expanded by 5% and total revenue increased 8%. The company maintains a robust gross profit margin of 70.51%, though it currently trades at a relatively high P/E ratio of 47.48x, according to InvestingPro data.
Stifel believes the combination of sustainable cloud growth and operating expense discipline should enable Oracle to overcome revenue mix shift headwinds and post accelerating EPS growth in fiscal year 2027 and beyond, with the new price target representing approximately 30 times Stifel’s revised fiscal year 2027 EPS estimate of $8.35.
In other recent news, Oracle has reported strong fiscal fourth-quarter results, surpassing expectations in both revenue and earnings per share. BNP Paribas (OTC:BNPQY) Exane responded by raising its price target for Oracle to $226, citing the company’s potential for accelerated growth in its key business segments, including Oracle Cloud Infrastructure. Jefferies also increased its price target to $220, highlighting Oracle’s robust revenue performance obligations growth and the expected acceleration of cloud revenue in fiscal year 2026. Guggenheim followed suit, raising its price target to $250, noting Oracle’s focus on operating income growth and the anticipated acceleration of revenues in the coming years.
In addition to these financial projections, Oracle has announced a partnership with xAI to offer Grok models via Oracle Cloud Infrastructure’s Generative AI service. This collaboration is expected to enhance AI capabilities for enterprise applications. Moreover, Oracle is set to deploy AMD (NASDAQ:AMD) Instinct MI355X GPUs in its cloud infrastructure, providing enhanced options for AI computing resources. This move aims to support large-scale AI training and inference workloads with improved price-performance ratios. These developments reflect Oracle’s continued expansion in the cloud and AI sectors, positioning the company to capitalize on growing demand for advanced technology solutions.
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