On Tuesday, Barclays (LON:BARC) has increased its price target for Oracle Corporation (NYSE:ORCL) to $172.00, up from the previous $160.00, while maintaining an Overweight rating on the stock. The decision comes after Oracle reported its first-quarter results, which, although typically a smaller quarter in terms of expectations, showed a slight outperformance.
Oracle's first quarter saw a modest acceleration in the growth of its Software as a Service (SaaS) and Infrastructure as a Service (IaaS) offerings, which was a positive note for the company's shares. However, the most significant impact on the analyst's outlook was the reported growth in Remaining Performance Obligations (RPO).
The RPO, a measure of future revenue, not only increased sequentially, which is unusual for the first quarter, but also showed a marked acceleration, growing 53% year-over-year compared to the 44% growth rate in the fourth quarter.
Barclays highlighted that the strong RPO figure is a key factor in changing the narrative around Oracle. Previously, on July 19, 2024, it was noted that Oracle was under-owned by many large long-only accounts. The current results are expected to contribute to a shift in perception and support a continued upward trajectory for Oracle's stock.
The analyst from Barclays concluded that the results like the ones Oracle has posted for the first quarter are likely to go a long way in continuing to change the narrative around the company. With the maintained Overweight rating, the firm signals its positive stance on Oracle's stock performance going forward.
In other recent news, Oracle Corporation has seen a wave of analyst upgrades following strong first-quarter results. Jefferies raised its price target for Oracle to $170, citing positive quarterly-to-date results, particularly in the Retail and e-Commerce segments. Similarly, Evercore ISI increased Oracle's price target to $175, highlighting robust growth in cloud backlog.
DA Davidson lifted its price target for Oracle to $140, attributing this to a surge in demand for AI training compute capacity on Oracle's Cloud Infrastructure.
Deutsche Bank (ETR:DBKGn) pushed Oracle's price target to $180, emphasizing the company's impressive Cloud Infrastructure segment growth. Finally, Goldman Sachs (NYSE:GS) revised its price target for Oracle to $155, acknowledging the momentum in Oracle's Cloud Infrastructure.
Oracle's first quarter results revealed a 7% year-over-year increase in revenues, reaching $13.31 billion. The Cloud Infrastructure segment saw a revenue growth acceleration to 46% year-over-year, contributing to a 52% year-over-year growth in Remaining Performance Obligations.
Oracle's partnerships with Google (NASDAQ:GOOGL) Cloud and Amazon (NASDAQ:AMZN) Web Services have led to the launch of joint database services, aimed at streamlining cloud migration and management of enterprise workloads.
On the legal front, Oracle recently settled a privacy lawsuit for $115 million. In acquisition news, 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. These are recent developments that continue to shape Oracle's trajectory.
InvestingPro Insights
Oracle Corporation's (NYSE:ORCL) recent performance has drawn attention, with Barclays raising its price target. To further inform our understanding of Oracle's financial health and stock potential, InvestingPro metrics provide a snapshot of its valuation and profitability. Oracle's market capitalization stands at a robust $385.52 billion, reflecting its substantial presence in the market. Despite a high P/E ratio of 36.89, indicating a premium valuation, the company's revenue growth over the last twelve months has been positive at 6.02%. This growth is a testament to Oracle's ability to expand its business in a competitive industry.
InvestingPro Tips suggest that Oracle has been a consistent performer, maintaining dividend payments for 16 consecutive years and raising its dividend for 10 consecutive years. This demonstrates Oracle's commitment to returning value to shareholders. Furthermore, analysts predict the company will be profitable this year, which is supported by a strong gross profit margin of 71.41% in the last twelve months. These factors may contribute to the narrative shift that Barclays anticipates.
For investors seeking more insights, there are additional InvestingPro Tips available on Oracle, including analysis on its trading multiples and liquidity position. Visit https://www.investing.com/pro/ORCL for a comprehensive list of tips and to explore the full range of data points and analysis offered by InvestingPro.
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