A recent pullback in
Oracle
‘s stock price makes for a compelling buying opportunity, Evercore analysts said Monday as they flipped their rating on the cloud service provider’s shares.
Evercore’s Kirk Materne and team now rate Oracle’s stock at Outperform as opposed to In Line, the equivalent of Neutral, earlier. They also raised their target for the price to $135 from $131. The new target implies a 23% gain from Friday’s closing price of $109.96.
Oracle was up by almost 1% in premarket trading Monday, while futures on the
S&P 500
were 0.7% lower.
The stock has fallen 13% since Sept. 11, when the enterprise software provider reported its results for its first fiscal quarter. Both the earnings and management’s outlook for the quarter fell short of Wall Street’s expectations. The recently acquired Cerner healthcare-software business is facing near-term challenges as customers shift from upfront payments to cloud subscriptions, “which are recognized ratably,” CEO Safra Catz warned investors.
The recent pullback after the results “simply creates a more interesting entry point” for investors, Materne wrote.
While Evercore recognizes Cerner will continue to create some debate in the near term, the “apps and infrastructure cloud businesses are now big
enough as a percentage of revenue to drive total revenue growth in the high
single digits going forward,” Materne wrote, referring to Oracle’s core cloud offering.
Materne estimated the core business should account for about half of total revenue in fiscal 2026, helping take revenue to $62.9 billion from $40.5 billion in 2021. Management forecasts $65 billion in revenue in fiscal 2026.
“The math is working in Oracle’s favor,” he wrote.
Write to Karishma Vanjani at [email protected].
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