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Bernstein sees Oracle as a safe harbor, maintains stock target and rating

EditorNatashya Angelica
Published 03/09/2024, 13:56
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On Tuesday, Bernstein, a research group, maintained its positive stance on shares of Oracle Corporation (NYSE:ORCL), reiterating an Outperform rating and a $171.00 price target for the tech giant's shares. Oracle is recognized for its stability during economic uncertainties, and its growth prospects are increasingly coming to the forefront, according to the firm.

The firm's endorsement comes with the observation that Oracle's strategic shift toward cloud services, including its second-generation Oracle Cloud Infrastructure (OCI) and Autonomous Database, as well as its Strategic Back Office operations, is expected to drive sustained revenue growth for the foreseeable future.

Bernstein highlighted Oracle's reasonable valuation in the current softer macroeconomic environment, noting the company's defensive qualities. These attributes, coupled with a favorable outlook for the year 2025, suggest that Oracle could potentially experience growth acceleration.

The firm's analysis points to Oracle's cloud transition as a key factor in its long-term revenue prospects. The company's OCI Gen II and Autonomous Database offerings are seen as significant contributors to this sustained growth trajectory.

In summary, Bernstein's position reflects confidence in Oracle's future performance, underpinned by its strategic cloud initiatives and solid market positioning. The $171.00 price target remains unchanged, indicating the firm's belief in the company's value and potential for growth.

In other recent news, Oracle Corporation has been in the spotlight due to its connections with the social media platform TikTok amidst ongoing legal disputes. TikTok is challenging the U.S. Department of Justice's mandate for its parent company, ByteDance, to divest its U.S. operations due to alleged national security concerns.

The company has countered these assertions, emphasizing that its user data and content recommendation algorithm are securely stored on U.S.-based Oracle cloud servers. These developments are unfolding as the appeals court prepares to conduct oral arguments on the legal dispute.

In another significant development, Oracle recently settled a privacy lawsuit for $115 million, despite maintaining it did not engage in any wrongdoing. The settlement agreement requires Oracle to cease collecting user-generated information from the URLs of websites visited by users and the text entered in online forms, except on its own websites.

On the financial front, Mizuho has reiterated an Outperform rating on Oracle, maintaining a positive outlook ahead of the company's first fiscal quarter and Analyst Day. Analysts predict that Oracle will surpass estimates, driven by the strength of its Oracle Cloud Infrastructure.

Further growth is anticipated from expansions in artificial intelligence, database migration facilitated by multi-cloud partnerships, and a potential recovery in its Cerner (NASDAQ:CERN) operations. Edward Jones has also maintained a Buy rating on Oracle, pointing to the company's strategic expansion into cloud services and the anticipated boost in sales growth following the full integration of Cerner.

InvestingPro Insights

In light of Bernstein's optimistic outlook on Oracle Corporation, current InvestingPro Data underscores the company's financial stature. Oracle boasts a robust market capitalization of $389.38 billion, reflective of its significant presence in the technology sector. The company's P/E ratio stands at a high 38.08, suggesting a premium market valuation which aligns with its established reputation and market position.

InvestingPro Tips reveal that Oracle has not only raised its dividend for 10 consecutive years but also maintained dividend payments for 16 consecutive years, showcasing a strong commitment to shareholder returns. Moreover, the company's revenue has grown by 6.02% over the last twelve months as of Q4 2024, indicating a healthy financial trajectory.

For investors seeking more detailed analysis, InvestingPro offers a plethora of additional tips on Oracle, including insights into earnings revisions, trading multiples, and liquidity concerns. With 17 more InvestingPro Tips available, users can gain a comprehensive understanding of Oracle's financial health and market potential. To explore these insights in depth, consider visiting https://www.investing.com/pro/ORCL.

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

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