On Thursday, RBC (TSX:RY) Capital maintained a "Sector Perform" rating on shares of Oracle Corporation (NYSE:ORCL) with a steady price target of $165.00. The firm's analyst provided insights ahead of Oracle's second-quarter fiscal year 2025 earnings report, which is scheduled for release on December 9th after the market closes.
With a current market capitalization of $521.49 billion, Oracle stands as a prominent player in the software industry, as highlighted by InvestingPro data.
The analyst expressed caution, suggesting that the risk/reward balance leans negative as the earnings date approaches. Despite a strong rally in Oracle's share price, which saw a 30% increase since the first-quarter results were reported—a performance that outpaced the IGV index's 24% rise—the firm decided to remain neutral.
InvestingPro analysis indicates that Oracle is currently trading above its Fair Value, with the stock showing an impressive 80.68% year-to-date return and trading near its 52-week high of $196.04.
Oracle's past quarter performance is anticipated to show a slight advantage over consensus expectations, mirroring the pattern of the first-quarter results. This translates to an expected year-over-year growth of 10%.
Moreover, non-GAAP earnings per share (EPS) are projected to surpass consensus, following the trend of recent average beats, potentially reaching around $1.50, which would mark a 12% growth compared to the previous year.
The company currently trades at a P/E ratio of 47.24, with trailing twelve-month revenue reaching $53.81 billion. For deeper insights into Oracle's valuation metrics and growth potential, access the comprehensive Pro Research Report available on InvestingPro.
RBC Capital's stance comes as Oracle's shares have experienced significant growth since the last earnings report, with a remarkable 54.24% price return over the past six months. The anticipation surrounding the upcoming earnings announcement is high, with Oracle expected to reveal its financial performance for the quarter ending in November. The full comparative analysis of Oracle can be found on page three of the RBC Capital's report.
In other recent news, Oracle Corporation has been the subject of various significant developments. Guggenheim has maintained a positive outlook on Oracle, raising its price target to $220 and keeping a Buy rating. The firm's confidence stems from Oracle's robust performance in its Cloud business and its strategy to integrate artificial intelligence services into its core platform.
Oracle has also expanded its partnership with NTT DATA Japan to enhance cloud service offerings using Oracle Alloy. In terms of financial moves, Oracle has issued $6.25 billion in senior notes for debt repayment and potential future acquisitions.
The U.S. Army is migrating its Integrated Personnel and Pay System-Army to the Oracle U.S. Defense Cloud, which is expected to result in significant cost savings and improved HR and payroll efficiency. Oracle's shareholders have elected a board of directors and approved executive pay, while Ernst & Young LLP was ratified as the independent auditor for the upcoming fiscal year.
On the analyst front, HSBC raised its price target for Oracle based on the strong performance of Oracle Cloud Infrastructure. Erste Group upgraded Oracle from Hold to Buy, citing robust software offerings and expanding cloud infrastructure.
However, RBC Capital initiated coverage with a "Sector Perform" rating, expressing concerns about Oracle's cloud infrastructure segment's ability to compete effectively with industry giants such as Amazon (NASDAQ:AMZN) Web Services and Microsoft (NASDAQ:MSFT) Azure.
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