Stephens sets Oracle stock rating at Equal Weight, PT $167

On Wednesday, Stephens began coverage on Oracle Corporation (NYSE:ORCL) with an Equal Weight rating and a price target of $167.00. The coverage by Stephens highlights Oracle’s strong position in the back office software sector and its growing portfolio of strategic applications. With a substantial market capitalization of $428.7 billion and position as a prominent player in the Software (ETR:SOWGn) industry according to InvestingPro, Oracle continues to demonstrate its market dominance. The analyst, Brett Huff, pointed out the company’s large market share and the increasing mix of strategic, growing applications as positive factors.

Oracle’s IT infrastructure growth opportunities were also emphasized, including initiatives such as Stargate, a rejuvenation of the database business, multi-cloud strategies, AI training, and the potential within the hyperscaler market. The analyst noted Oracle’s peer-leading margins, evidenced by its impressive 71.1% gross profit margin and $55.8 billion in revenue over the last twelve months, which contribute to significant cash generation, allowing the company to acquire quality growth assets.

The recent substantial growth in Remaining Performance Obligations (RPO) was mentioned as a positive indicator for Oracle’s future revenue growth. However, the analyst also observed some areas of concern. Some of Oracle’s business applications rely on older technology, which could be a drawback.

Additionally, the analyst suggested that the market has partially priced in the IT infrastructure opportunities, as evidenced by the muted stock reaction to the recent dramatic RPO growth. This assessment aligns with InvestingPro data showing Oracle’s stock has declined 10.4% over the past six months, despite analyst targets suggesting potential upside. This implies that the market may have already accounted for some of the potential growth in Oracle’s stock price.

Oracle’s stock rating and price target by Stephens reflect a balanced view of the company’s prospects, acknowledging its strong market presence and opportunities for growth, while also considering the challenges it faces. InvestingPro offers additional insights through its comprehensive Pro Research Report, one of 1,400+ available for top US stocks, providing deeper analysis of Oracle’s valuation, growth prospects, and financial health metrics.

In other recent news, Oracle Corporation has announced the integration of NVIDIA (NASDAQ:NVDA) AI Enterprise into its Oracle Cloud Infrastructure, enhancing its AI capabilities and providing over 160 AI tools for customers. This collaboration aims to streamline the deployment of AI models and meet various compliance requirements. Oracle is also contemplating acquiring a minor stake in TikTok’s US operations, proposing to provide security assurances while the app’s algorithm remains under Chinese control. This proposal is part of ongoing negotiations to prevent a potential TikTok ban in the US.

Additionally, Oracle plans to invest $5 billion in the UK over the next five years to expand its cloud infrastructure, supporting AI innovation and implementation in the region. This investment aligns with the UK Government’s vision for AI advancement. Oracle has also launched Java 24, introducing features for AI and post-quantum cryptography, enhancing developer productivity and security. The new version includes improvements for vector computations and multithreaded code efficiency.

TD Cowen analysts have maintained a Buy rating on Oracle, with a price target of $210, citing robust third-quarter bookings and Oracle’s leading position in AI training. They anticipate significant growth acceleration in the coming years, bolstered by Oracle’s expanding capacity and data center operations. The analysts expect Oracle’s growth rates to double within the next year, driven by AI-related advancements and new opportunities.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.