Oracle Analyst Sees More Upside To Stock After Monday's 6% Surge

Oracle Corporation ORCL has been making waves in the tech industry with its impressive growth in the cloud sector. The company’s recent Q4 earnings report has further solidified its position, leading to an optimistic outlook from analysts.

The Oracle Analyst: Brent A. Bracelin, a Senior Research Analyst at Piper Sandler, maintains an Overweight rating on Oracle’s stock with a price target of $130. This comes after the company’s Q4 earnings report, where Oracle beat top-line estimates with accelerating Cloud Infrastructure growth of 77%.

The Oracle Thesis: Oracle’s Q4 results have reinforced Bracelin’s bullish view that the company is entering a new era of improving growth and profitability metrics. The Oracle Cloud segment (excluding Cerner) grew by more than 30% year-over-year to a $15B+ annualized run-rate, representing 28% of sales. This growth, coupled with an improving operating margin of 44.5%, has led Bracelin to increase his revenue forecast for FY24 and FY25.

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Oracle’s Cloud Dominance: Oracle’s cloud growth has been a significant driver of its recent success, Bracelin noted. The company’s Gen 2 OCI growth accelerated to 89% year-over-year from 65% last quarter and now sits at a $5.2B run-rate. Management expects another “excellent year” of revenue growth from Gen 2 OCI as existing data centers fill up and new ones come online.

Moreover, Oracle’s partnership with Cohere has led to the launch of a generative AI cloud service for enterprise customers, further strengthening its position in the cloud sector, according to the analyst.

Price Action: Oracle’s stock last traded at $116.43 in Monday’s regular session.

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