Analyst Keith Bachman of BMO Capital maintained a Hold rating on Oracle (ORCL – Research Report), boosting the price target to $200.00.
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Keith Bachman has given his Hold rating due to a combination of factors impacting Oracle’s financial outlook. While Oracle is expected to experience a decline in operating margins in the coming fiscal years due to depreciation pressures, there is potential for double-digit growth in operating income by FY27 driven by revenue acceleration. Bachman notes that the company’s transition towards cloud services, particularly OCI and AI workloads, is capital intensive, which may affect valuation metrics and suggests that current consensus estimates for capital expenditures and free cash flow are overly optimistic.
Despite these challenges, there is optimism regarding Oracle’s ability to reaccelerate growth, particularly in areas such as ERP, HCM, and SCM. However, concerns remain about the lack of significant growth in Oracle’s software and database revenues, which have shown limited acceleration. Bachman believes that as long as Oracle continues to grow its operating income, the stock has potential, but the mixed signals and uncertainties lead to a Hold rating at this time.
Bachman covers the Technology sector, focusing on stocks such as ServiceNow, Adobe, and SAP AG. According to TipRanks, Bachman has an average return of 11.2% and a 59.11% success rate on recommended stocks.
In another report released today, Morgan Stanley also maintained a Hold rating on the stock with a $175.00 price target.