Guggenheim Reiterates Buy Rating on Oracle
Guggenheim analyst John DiFucci reiterated a Buy rating and $400.00 price target on Oracle (NYSE: ORCL).
“Oracle reported solid F4Q26 results and issued very strong F1Q27 guidance that was above consensus estimates and the Buy side per our TMT desk – and additional color indicates it gets better from there with F1Q27 revenue guidance above the Street and Buy side.
In addition, RPO increased $85B to $638B partially due to four customers of $8B or more, which we believe continues to result in materially less customer concentration.
Incremental information was also given regarding the Capex and funding needs for FY27.
Total capex will be $90-95B, but $20-25B of that will be upfront customer payments, thus reducing the capital raise needs of Oracle.
Oracle said they would raise about $20B of incremental debt in FY27, but not until calendar 2027.
It has yet to sell the $20-25B of equity it previously said it would to partially satisfy its capital requirements.
Furthermore, information on the timing of capacity coming online increases our confidence that setup for F1Q27 and beyond is favorable.
The stock was down 10% after hours for no apparently good reason, in our view; perhaps because they’ve yet to sell equity (with some fears of buying ahead of that), the lack of a raise in revenue guidance (stay tuned), the 45% run-up in the stock over the last 2 months vs. the S&P 500 +7% (which would have been more, but it gave back almost 20% over the last 10 days vs. the S&P -4%), or maybe people just don’t like Oracle red.
We view these results as validation of Oracle as our Best Idea based on superior technology enabling it to provide better performance at a lower price in a burgeoning hyper growth market, which should eventually turn into a cash flow waterfall (in FY29E), in our view.
Our call on Oracle is not for the quarter, but for the year and perhaps the decade.
We reiterate our Buy-rating, $400 Price Target, and Best Idea designation, and would suggest investors aggressively buy the shares here.”
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