Barclays Raises Oracle Price Target to $250

Barclays analyst Raimo Lenschow raised the price target on Oracle (NYSE: ORCL) to $250.00 (from $240.00) while maintaining an Overweight rating.

“We are puzzled by ORCL’s after-hour share price reaction (down meaningfully).

True, cloud application and software (license plus maintenance) were slightly below consensus, but these are the parts that matter less for Oracle going forward.

What is more important is that Oracle had another large RPO beat, suggesting ongoing AI demand that outweighs supply and ongoing momentum for ORCL.

The additional RPO is not driving crazy new funding needs though as BYOC (Bring-Your-Own-Chips) and prepayments are now major components of the new deals.

In other words, management got the message that the market wants to see growth but with a healthy ROIC profile.

The new CFO clarified CapEx plans for next year (~$70bn net CapEx, $90-95bn reported, which includes customer prepayments of $20-25bn, which seems to be below investor expectations on a net basis) and reiterated the FY 2030 targets.

Long-term investors can now revisit the story as the growth outlook is the same or better while the return profile is likely increasing from here.

At the current valuation level of ~21x CY27E P/E, we see this as very attractive. We reiterate our Overweight rating and raise our price target to $250 (from $240).”

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