Analyst Kash Rangan of Goldman Sachs reiterated a Hold rating on Oracle (ORCL – Research Report), with a price target of $130.00.
Kash Rangan has given his Hold rating due to a combination of factors including Oracle’s recent performance and future capital expenditure (CapEx) concerns. Oracle exhibited strong third-quarter results, including a revenue that aligned with consensus and a noteworthy 49% growth in its Infrastructure-as-a-Service (IaaS). However, despite the positive indicators such as robust Remaining Performance Obligation (RPO) growth, there are reservations about Oracle’s ability to maintain this momentum in IaaS growth through fiscal year 2026 without significantly increasing its CapEx.
Rangan’s analysis suggests that while Oracle’s CapEx is expected to decrease, competitors like Microsoft are ramping up their CapEx investments. This raises questions about Oracle’s future growth sustainability. If Oracle can efficiently leverage its CapEx in relation to IaaS revenue, it could potentially generate impressive free cash flow by FY26. However, if IaaS growth slows and CapEx utilization is not optimized, the scenario is less favorable. Rangan’s neutral stance reflects this uncertainty, balancing the potential outcomes of Oracle’s financial strategy and acknowledging that while the company shows promise, there are significant risks that need to be addressed before a more positive rating can be justified.
See Insiders’ Hot Stocks on TipRanks >>
TipRanks tracks over 100,000 company insiders, identifying the select few who excel in timing their transactions. By upgrading to TipRanks Premium, you will gain access to this exclusive data and discover crucial insights to guide your investment decisions. Begin your TipRanks Premium journey today.
Oracle (ORCL) Company Description:
Oracle Corp. engages in the provision of products and services that address all aspects of corporate information technology environments. It operates through the following business segments: Cloud and License, Hardware, and Services. The Cloud and License segment markets, sells, and delivers applications, platform, and infrastructure technologies. The Hardware segment provides hardware products and hardware-related software products including Oracle Engineered Systems, servers, storage, industry-specific hardware, operating systems, virtualization, management and other hardware related software, and related hardware support. The Services segment offers consulting, advanced support, and education services. The company was founded by Lawrence Joseph Ellison, Robert Nimrod Miner and Edward A. Oates on June 16, 1977 and is headquartered in Redwood City, CA.
Read More on ORCL:
- AI Propels Oracle Stock (NYCE:ORCL) Higher
- ORCL Earnings: Oracle Surges after Earnings Beat
- Oracle Announces Fiscal 2024 Third Quarter Financial Results
- Options Volatility and Implied Earnings Moves Today, March 11, 2024
- Options Volatility and Implied Earnings Moves This Week, March 11 – March 15, 2024
