BofA Securities has adjusted its price target for Oracle Corporation (NYSE: NYSE:ORCL), raising it to $175 from the previous $155, while maintaining a Neutral rating on the shares.
The adjustment follows Oracle's reported increase in its Remaining Performance Obligations (RPO) growth, which showed a significant year-over-year acceleration to 53% from 44%.
The company's shift towards cloud services is noted as a contributing factor to this growth. Despite this positive trend, the analyst pointed out a deceleration in the calculated RPO (cRPO) growth, which slowed to 18% from a prior 33%. This suggests that the first-quarter RPO may have benefited from longer contract durations and some substantial Oracle Database migration deals.
Oracle's Cloud Infrastructure (OCI) growth was also highlighted, with a 3 percentage point acceleration to 46% year-over-year. Excluding the impact of the legacy clustering business, this growth rate would be even higher, at 49%. This indicates that Oracle has been effectively executing its migration deals.
In other recent news, Oracle Corporation has reported a 7% year-over-year increase in revenues, totaling $13.31 billion, in its first quarter results. The growth was mainly driven by the Cloud Infrastructure segment, which saw a revenue acceleration of 46% year-over-year, contributing to a 52% year-over-year growth in Remaining Performance Obligations (RPO).
Oracle's partnerships with Google (NASDAQ:GOOGL) Cloud and Amazon (NASDAQ:AMZN) Web Services have led to the launch of joint database services, aimed at streamlining cloud migration and management of enterprise workloads. On the legal front, Oracle recently settled a privacy lawsuit for $115 million.
In acquisition news, Oracle co-founder Larry Ellison is set to gain control of Paramount Global following Skydance Media's acquisition of the Redstone family's stake in the film and television company.
Oracle has seen a wave of analyst upgrades following these strong first-quarter results. Barclays increased its price target for Oracle to $172, Jefferies raised its price target to $170, and Evercore ISI increased Oracle's price target to $175. DA Davidson lifted its price target for Oracle to $140, and Deutsche Bank pushed Oracle's price target to $180. Goldman Sachs revised its price target for Oracle to $155.
InvestingPro Insights
Oracle Corporation (NYSE:ORCL) continues to make notable strides in the technology sector, as reflected by its steady performance and strategic shifts. According to InvestingPro data, Oracle boasts a substantial market capitalization of $385.52 billion, underscoring its significant presence in the industry. The company's Price/Earnings (P/E) Ratio stands at 36.89, indicative of investor confidence in its earnings potential, though it suggests a premium valuation at current levels.
InvestingPro Tips reveal Oracle's commitment to shareholder returns, having raised its dividend for 10 consecutive years. This consistent dividend track record, coupled with a 1.14% dividend yield, can be particularly attractive to income-focused investors. Moreover, Oracle's notable gross profit margin of over 71% in the last twelve months as of Q4 2024 demonstrates its efficiency in maintaining profitability amidst competitive market dynamics.
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