Morgan Stanley Lowers Oracle Price Target to $213

Morgan Stanley analyst Keith Weiss lowered the price target on Oracle (NYSE: ORCL) to $213.00 (from $320.00) while maintaining an Equalweight rating.

“GPUaaS is a sizable revenue opportunity, but our collaborative deep dive across the equity, credit and GVAT teams suggests the buildout will push EPS below targets and drive materially higher funding needs.

Equity valuation appears to reflect this, while credit still looks rich. views: From the equity perspective, we struggle to see a viable path to Oracle’s EPS targets, a view factored into the current share price, leaving a balanced risk/reward.

We reduce our PT to $213 from $320 and remain Equal-weight.

From the credit perspective, we think key risks, including our new higher forecasts for funding needs and leverage, are not reflected in spreads, even after underperformance.

We recommend buying CDS and selling benchmark bonds.”

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