On Friday, Cantor Fitzgerald began coverage on Oracle Corporation (NYSE:ORCL) stock, giving the tech giant an Overweight rating and setting a price target of $214.00.
The firm's analysis highlighted Oracle's strong position in the data management sector, particularly its dominance in the relational database market and the growth of its Artificial Intelligence (AI) capabilities through the Oracle Cloud Infrastructure (OCI).
With a market capitalization of $446 billion and impressive one-year returns of over 51%, Oracle has established itself as a prominent player in the software industry. According to InvestingPro data, analyst targets for the stock range from $140 to $220.
Oracle's cloud-based business model is seen as a key driver of dynamic growth and margin expansion, with the company's EBIT margin reaching 43.4% in the most recent quarter. OCI, powered by AI, is expected to accelerate in the second half of fiscal year 2025, with projections of over 60% growth.
InvestingPro analysis reveals impressive financial metrics, including a gross profit margin of 71.26% and annual revenue of $54.93 billion. Subscribers can access 14 additional ProTips and comprehensive financial analysis through the Pro Research Report.
Additionally, the cloud database services (CDBS) provided both on OCI and through other cloud services like Azure and AWS are anticipated to boost revenue and margins in the upcoming quarters and years.
The report acknowledges that near-term capital expenditures related to AI advancements may initially pressure gross margins. However, this is viewed as a strategic move that will yield long-term benefits, justifying any short-term financial impacts.
The analyst's valuation of Oracle shares at 8.5 times its expected calendar year 2026 revenue compares favorably to the overall software industry's multiple of 8.9 times, and Microsoft (NASDAQ:MSFT)'s 9.1 times, underscoring the firm's positive outlook on Oracle's financial prospects.
Based on InvestingPro's Fair Value analysis, Oracle appears to be trading above its intrinsic value, with current P/E ratio at 38x and EV/EBITDA at 24x. For a deeper understanding of Oracle's valuation metrics and growth potential, investors can access the comprehensive Pro Research Report.
Cantor Fitzgerald's price target of $214 represents a belief in Oracle's potential to benefit in both the short and long term from its AI initiatives and the continued growth of OCI, particularly in relation to CDBS. Oracle's current trajectory, as outlined by Cantor Fitzgerald, suggests the company is well-positioned to capitalize on its strategic investments and solidify its standing in the competitive cloud computing landscape.
In other recent news, Oracle Corporation has experienced several significant developments. The tech giant announced the upcoming retirement of Executive Vice President and Chief Corporate Architect, Edward Screven, by the end of February 2025. Oracle's recent Q2 results led to Monness, Crespi, Hardt downgrading the company's shares from Neutral to Sell, influenced by uninspiring Q2 results and concerns over Oracle's intention to double its capital expenditures in FY25. Despite this, Oracle reported a 9% increase in sales driven by a 24% rise in cloud revenue.
The Supreme Court is currently hearing arguments regarding a potential TikTok ban which could impact several tech companies, including Oracle. Analysts from Morgan Stanley (NYSE:MS) predict that if the ban is enacted, Meta (NASDAQ:META) and YouTube could benefit from a shift in user activity. However, for Oracle, which hosts TikTok, the ban could result in a loss of income.
Financial research firm CFRA has maintained its Hold rating on Oracle, despite its high net debt position of $77 billion. The firm has increased the 12-month price target for Oracle from $172 to $189, based on the company's consistent growth in Infrastructure as a Service (IaaS) revenues. TD (TSX:TD) Cowen reaffirmed a Buy rating on Oracle, citing a solid Q2 with 9% revenue growth and significant 52% growth in Oracle Cloud Infrastructure (OCI).
Stifel, on the other hand, raised its price target for Oracle following the company's reaffirmation of its commitment to doubling its capital expenditure to approximately $15 billion and anticipating over 50% growth in its Cloud segment for the fiscal year 2025. These are the recent developments in Oracle Corporation.
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