On Tuesday, Mizuho maintained a positive outlook on Oracle Corporation (NYSE:ORCL), raising its price target to $185 from the previous $170 while keeping an Outperform rating on the stock.
The adjustment follows Oracle's robust first-quarter results, which were particularly bolstered by its cloud infrastructure segment. The company's Remaining Performance Obligations (RPO) saw a significant year-over-year increase of 53%, amounting to $99 billion.
Oracle's recent announcement of a partnership with Amazon (NASDAQ:AMZN) Web Services (AWS) has also been a boon, contributing to a 9% rise in its shares after hours. The company's management has confirmed its forecast for double-digit revenue growth for the fiscal year 2025, which surpasses the consensus estimate of 9%. Expectations are set for both total revenue and Oracle Cloud Infrastructure (OCI) revenues to pick up pace in the following quarters.
The firm anticipates that Oracle might elevate its mid-term guidance during the Financial Analyst Meeting scheduled for this Thursday. Oracle's extensive range of established infrastructure and application products, its strategy to embrace a multi-cloud environment through partnerships with leading hyperscalers, and the growing demand for artificial intelligence (AI) solutions position it to potentially accelerate its growth trajectory.
Oracle is hosting CloudWorld this week in Las Vegas, which, along with the upcoming Financial Analyst Meeting, are seen as potential near-term catalysts for the company's stock. Mizuho also mentioned an opportunity for interested parties to join a breakfast with a major Oracle partner on September 12th during the CloudWorld event.
In other recent news, Oracle Corporation reported a 7% year-over-year increase in revenues, totaling $13.31 billion, with a notable 46% year-over-year acceleration in its Cloud Infrastructure segment.
This growth contributed to a 52% year-over-year rise in Remaining Performance Obligations (RPO). Several analyst firms have revised their price targets for Oracle, including BofA Securities, which raised its price target to $175, Barclays (LON:BARC) to $172, Jefferies to $170, Evercore ISI to $175, DA Davidson to $140, Deutsche Bank (ETR:DBKGn) to $180, and Goldman Sachs (NYSE:GS) to $155.
Oracle has also been expanding its partnerships with Google (NASDAQ:GOOGL) Cloud and Amazon Web Services, launching joint database services to simplify cloud migration and enterprise workload management.
On the legal front, Oracle settled a privacy lawsuit for $115 million. In the realm of acquisitions, Oracle co-founder Larry Ellison is set to gain control of Paramount Global following Skydance Media's acquisition of the Redstone family's stake in the film and television company.
InvestingPro Insights
Oracle Corporation (NYSE:ORCL) has shown a strong performance, as reflected in its recent first-quarter results, which have been further acknowledged by Mizuho's raised price target. To provide a more comprehensive financial perspective, InvestingPro insights reveal that Oracle has been consistent in rewarding shareholders, having raised its dividend for 10 consecutive years. This consistency is a testament to the company's financial health and commitment to returning value to its investors.
From a valuation standpoint, Oracle is currently trading at a high earnings multiple, with a P/E Ratio of 36.89. This indicates a premium valuation relative to the market, which could be justified by Oracle's position as a prominent player in the software industry and its potential for growth, particularly in cloud infrastructure as highlighted by the partnership with AWS. However, it is also important to note that Oracle's short-term obligations exceed its liquid assets, which could be a point of consideration for risk-averse investors. Moreover, the company has experienced a large price uptick over the last six months, with a 25.19% return, suggesting strong investor confidence.
For readers seeking deeper analysis and more such insights, there are over 14 additional InvestingPro Tips available, which can be explored for a more informed investment decision. These tips are part of the comprehensive analysis provided by InvestingPro, which includes metrics such as revenue growth, dividend yield, and fair value estimates. For instance, Oracle's revenue growth over the last twelve months was 6.02%, indicating a steady increase in its financial performance. Interested investors can find further details and tips at https://www.investing.com/pro/ORCL.
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