Analysts Flip To 'Outperform' On Oracle Amid Stock Pullback: 'Math Is Working In Favor'

Oracle’s recent stock price decline presents an appealing buying opportunity, according to Evercore analysts, who upgraded their rating on the cloud service provider’s shares on Monday.

Barron’s reported that Evercore’s Kirk Materne and his team have shifted their rating on Oracle ORCL stock from ‘In Line’ to ‘Outperform’. The team also increased their price target from $131 to $135, suggesting a 23% upside from Friday’s closing price of $109.96.

Oracle’s stock has dropped 13% since Sep. 11, following the company’s Q1 results, which didn’t meet Wall Street’s expectations. The company's recently acquired Cerner healthcare software business is encountering challenges as customers transition from upfront payments to cloud subscriptions, Oracle CEO Safra Catz alerted investors.

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However, Evercore analysts believe the post-results pullback offers a more attractive entry point for investors.

Despite short-term debates around Cerner, Materne noted the "apps and infrastructure cloud businesses are now big enough as a percentage of revenue to drive total revenue growth in the high single digits going forward."

Evercore expects Oracle's core cloud offering to account for approximately half of total revenue by fiscal 2026, boosting revenue to $62.9 billion from $40.5 billion in 2021. This is slightly below management’s forecast of $65 billion in revenue for fiscal 2026.

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