RBC Upgrades Oracle On TikTok Investment: 'A Shot In The Arm'

Oracle Corporation ORCL has confirmed a 12.5% stake in TikTok Global and announced that the video-sharing app will become an Oracle Cloud Infrastructure customer.

The deal is a “meaningful positive” for the company, according to RBC Capital Markets.

The Oracle Analyst: Alex Zukin upgraded Oracle from Sector Perform to Outperform and raised the price target from $60 to $68.

The Oracle Takeaways: Oracle’s investment is estimated at $7.5 billion, which seems to be a good use of its capital, as this may be “the defining social media asset of a generation,” Zukin said in a Monday upgrade note.

Depending on the valuation of the investment, “there could be as much as 12% upside in market value to Oracle over the next 12 months,” the analyst said. 

Terming the deal as “a shot in the arm for OCI,” he said that the it could accelerate growth “in a segment that is important for the future of Oracle.”

The IaaS/PaaS space represents a market expansion potential of $200 billion over the next four years, Zukin said.

“If Oracle were to win just 5% of this incremental opportunity, total revenue growth would be mid-high single digits, something Oracle has not seen over the last decade,” the analyst said. 

ORCL Price Action: Oracle shares were trading 1.32% higher at $60.54 at the time of publication Monday.