Oracle Corporation (NYSE: NYSE:ORCL) saw its price target increased by Piper Sandler from $150.00 to $175.00, while the firm retained an Overweight rating on the stock.
The adjustment comes as Oracle demonstrates a robust performance with three consecutive quarters of accelerating combined remaining performance obligations (cRPO) growth, reaching 18% year-over-year in the first quarter.
The investment firm's confidence in Oracle's sustained growth trajectory is bolstered by several factors. These include the company's successful collaboration with multi-cloud partners such as Azure, Google (NASDAQ:GOOGL) Cloud Platform (GCP), and Amazon (NASDAQ:AMZN) Web Services (AWS), rising demand for its Alloy platform, continued strength in its cloud database offerings, and momentum in Oracle Cloud Infrastructure (OCI).
The new price target is based on a projected calendar year 2026 earnings (CY26E) price-to-earnings (P/E) ratio of 23 times, which takes into account higher estimates and extends the forecast period to the calendar year 2026. The Overweight rating is maintained in light of these optimistic projections.
Oracle Corporation has reported strong financial results in its Q1 Fiscal Year 2025 Earnings Call. The company's total revenue increased by 8% year-over-year, reaching $13.3 billion, with a significant 22% rise in cloud revenue to $5.6 billion. Infrastructure as a Service (IaaS) revenue saw a remarkable surge of 46%. The operating income also rose by 14%, maintaining a 43% operating margin.
Oracle's non-GAAP EPS grew by 17% to $1.39, while GAAP EPS saw a 20% increase to $1.03. The company anticipates total revenue growth of 7% to 9% and cloud revenue to rise by 23% to 25% in the upcoming Q2. These are among the recent developments in the company.
Oracle is making significant investments in cloud infrastructure, with plans to expand to over 1,000 data centers. The company's multi-cloud strategy, including partnerships with AWS, Azure, and Google Cloud, is expected to drive further growth in the database business.
InvestingPro Insights
Oracle Corporation (NYSE:ORCL) has shown notable performance metrics that may interest investors looking to gauge the company's current market standing. With a substantial market capitalization of $385.52 billion, Oracle stands as a heavyweight in the Software industry. The company's P/E ratio, sitting at 36.89, indicates a high earnings multiple, which suggests that investors are expecting higher earnings growth in the future compared to the broader market. This aligns with the recent price target increase by Piper Sandler, reflecting a positive outlook on the company's earnings potential.
From the perspective of dividend reliability, an InvestingPro Tip highlights that Oracle has raised its dividend for 10 consecutive years and maintained dividend payments for 16 consecutive years, demonstrating a commitment to returning value to shareholders. This could be particularly appealing to income-focused investors.
While the company's revenue growth over the last twelve months has been 6.02%, the PEG ratio of 1.77 implies that Oracle's price may be high relative to its earnings growth, echoing the tip about trading at a high P/E ratio relative to near-term earnings growth. Nonetheless, the company's solid gross profit margin of 71.41% underscores its ability to maintain profitability, which is corroborated by the tip that analysts predict the company will be profitable this year.
For investors seeking further insights and analysis, there are additional InvestingPro Tips available at https://www.investing.com/pro/ORCL, which delve deeper into Oracle's financial health and market position.
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