Stifel Reiterates Buy Rating on Oracle

Stifel analyst Brad Reback reiterated a Buy rating and $220.00 price target on Oracle (NYSE: ORCL).

“While OCI (+92% Y/Y-CC) and total Cloud growth (46% Y/Y-CC) came in-line with expectations, the stock fell ~12% AH as management’s FY27 profitability commentary means GMs likely decline more than previously expected (we are now modeling down ~1000bps Y/Y vs.

700bps previously).

That said, management expects these headwinds to be offset by a YoY OPEX spending, and that Infrastructure GMs should improve in FY28 as revenue ramps into its capacity.

EPS beat by ~$0.03 excluding a 1x net-investment gain, driven by headcount efficiencies. RPO grew $85B Q/Q, as Oracle signed 4 >$8B and $67B of AI infrastructure contracts.

Looking forward, management reiterated FY27 revenue guidance ($90B) with ~115% implied OCI growth and expects $90-95B of capex ($70B net cash given customer prepayments).

Net/net, despite the lower near-term GMs, we believe that accelerating IaaS growth should lead to better EPS growth rates over the coming years.”

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