On Tuesday, RBC Capital maintained its Sector Perform rating for shares of Oracle Corporation (NYSE:ORCL) with a price target of $165.00. Following Oracle's mixed financial results and the stock's 8% drop in after-hours trading, the firm's stance remains unchanged.
The company's third-quarter revenue and earnings per share (EPS) showed strength on a constant currency basis, despite falling short of high expectations. According to InvestingPro data, Oracle's stock has surged nearly 83% year-to-date, with a current market capitalization of $527 billion and a P/E ratio of 49x.
Oracle's full-year 2025 revenue guidance was reaffirmed, and the EPS forecast only slightly missed projections due to factors below the bottom line. The Oracle Cloud Infrastructure (OCI) displayed resilience, with a slight acceleration attributed to artificial intelligence customer model training workloads.
Oracle's management has also projected an ambitious plan for cloud growth in the second half of the year, which has left investors skeptical about the feasibility of such targets. Recent InvestingPro data shows revenue growth of 6.4% and a robust gross profit margin of 71.3%, supporting the company's position as a prominent player in the software industry.
RBC Capital's analysis suggests that while OCI's growth was commendable, the potential for expansion may be limited, casting doubt on the company's aggressive revenue goals. The unchanged thesis by the analyst reflects a cautious outlook on the company's growth trajectory. Oracle's stock is currently trading at a price-to-earnings (P/E) ratio of 27 times the calendar year 2025 estimated earnings.
The price target of $165 set by RBC Capital is based on applying a 25 times multiple to the estimated earnings. This valuation reflects a conservative approach to Oracle's future earnings potential amid the company's efforts to expand its cloud offerings and increase market share in the competitive cloud services industry.
Oracle's stock performance and investor sentiment in the coming months will likely be influenced by the company's ability to meet its outlined cloud growth objectives and manage investor expectations regarding its financial targets.
In other recent news, Oracle Corporation has been the focus of several analyst firms following its recent earnings and revenue results. Piper Sandler raised its price target on Oracle's stock to $210, citing a robust growth in the company's cloud revenue performance obligations. The firm also highlighted Oracle's AI infrastructure which has attracted new customers, including Meta (NASDAQ:META).
Similarly, Bernstein increased its price target for Oracle to $213, noting an acceleration in the growth of Oracle Cloud Infrastructure. The firm also mentioned Oracle's strong operational efficiency, with an overall revenue growth of 6.4% and a gross profit margin of 71.26%.
KeyBanc Capital Markets maintained its Overweight rating on Oracle, with a price target of $200. The firm pointed out Oracle's 55% growth in Oracle Cloud Infrastructure revenue and the signing of a new AI deal with Meta.
Evercore ISI also increased its price target for Oracle to $200, highlighting the company's strong fiscal second-quarter performance and confidence in the planned capacity expansion for calendar year 2025.
Lastly, DA Davidson maintained a Neutral rating on Oracle and raised the price target to $150. The firm acknowledged Oracle's acceleration in total revenue but also noted that the company fell short of consensus estimates for both revenue and earnings.
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