On Monday, TD Cowen reiterated a Buy rating on Oracle Corporation (NYSE:ORCL) with a steady stock price target of $145.00. The firm anticipates an in-line fourth quarter, aligning with the Street's expectations of approximately 5% constant currency (cc) growth, which translates to roughly 7% organic growth.
The focus is on Oracle's Cloud Infrastructure (OCI), where TD Cowen projects a 43% cc growth in the fourth quarter of fiscal year 2024 and a 46% increase in fiscal year 2025. These estimates are slightly above the general market consensus.
The firm's outlook is set against the backdrop of the upcoming fourth quarter report, scheduled for June 11, 2024. Analysts are particularly bullish about the growth prospects for OCI, suggesting that another strong performance in this segment could lead to a valuation increase. Oracle's performance in OCI has been a key metric for analysts and investors, as cloud services continue to be a significant growth driver for the company.
TD Cowen's analysis suggests that Oracle's stock is currently trading at approximately 20 times the projected earnings for fiscal year 2025. With market sentiment still relatively subdued, there appears to be potential for an uplift in Oracle's valuation, especially if the company can deliver on the anticipated growth in its OCI segment.
Oracle's consistent focus on expanding its cloud services portfolio has been pivotal to its strategy. The company has been investing heavily in OCI as it competes with other major players in the cloud computing industry. The upcoming earnings report will be closely watched for signs of progress and to gauge the company's trajectory for the next fiscal year.
Investors and market watchers will be looking to the June 11 report to confirm TD Cowen's expectations and to assess whether Oracle can indeed outperform in its cloud infrastructure business. The performance of OCI will be critical to Oracle's growth narrative and its ability to attract further investment.
In other recent news, Oracle Corporation has been the focus of several significant developments. Evercore ISI maintained an Outperform rating for Oracle, highlighting their forecast of 50% Oracle Cloud Infrastructure (OCI) growth in FY25 and a FY26 revenue prediction of $65 billion. Oracle's acquisition of Cerner (NASDAQ:CERN) is anticipated to support high single-digit revenue growth in FY25.
Elon Musk's xAI has plans for a supercomputer, potentially in collaboration with Oracle, to be operational by fall 2025. This supercomputer will support the development of the next AI chatbot, Grok, and will be powered by Nvidia (NASDAQ:NVDA)'s flagship H100 GPUs.
Oracle has also unveiled a suite of AI enhancements within its Oracle Fusion Cloud Customer Experience (CX), designed to improve customer satisfaction and accelerate deal cycles. Furthermore, Oracle announced the availability of NVIDIA AI Enterprise on Oracle Cloud Infrastructure Supercluster for U.S. government agencies, aiming to accelerate sovereign artificial intelligence.
UBS maintained a buy rating for Oracle shares, focusing on the potential effects of a TikTok ban or divestiture on Oracle's role as the main cloud infrastructure provider for TikTok in the United States. Lastly, Oracle's cloud regions have been accredited by the U.S. Department of Defense at Defense Information Systems Agency Impact Level 6, enabling the hosting of Secret classified workloads.
InvestingPro Insights
As Oracle Corporation (NYSE:ORCL) gears up for its fourth quarter report, real-time data from InvestingPro offers a deeper dive into the company's financial health and market position. With a robust Market Cap of approximately $346.34 billion and a P/E Ratio standing at 32.4, Oracle demonstrates significant market valuation. The company's Revenue Growth for the last twelve months as of Q3 2024 is noted at 9.49%, showcasing a strong upward trajectory in its financial performance.
An InvestingPro Tip highlights Oracle's commitment to shareholder returns, having raised its dividend for 10 consecutive years. This consistency is a testament to the company's financial stability and its ability to generate cash flow. Additionally, Oracle's status as a prominent player in the Software industry is affirmed by its sustained investments in OCI, aligning with TD Cowen's positive outlook on the company's cloud infrastructure growth.
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