TD Cowen Reiterates Buy Rating on Oracle

TD Cowen analyst Derrick Wood reiterated a Buy rating and $300.00 price target on Oracle (NYSE: ORCL).

“Solid 4Q & Guide; Capacity Stepping Up W/ More Momentum In Pre-Paid/BYOC Deals; ORCL posted a 1pt beat to total revenue (20% cc), with OCI growth in line (+92% cc) and SaaS of +9% cc, below our +12% cc est.

RPO accelerated to +363% Y/Y, driven by prepaid & BYOC deals.

Incremental color on new capacity & buildout timing is adding a backstop to OCI forecasts for >100% growth.

Remain bullish on ORCL’s positioning amidst ramping AI infrastructure demand.

Net: Solid qtr of performance across OCI & margins, with SaaS slightly below.

Shares down ~5-10% AH, perhaps driven by lack of EPS guide upside as we/buyside had expected some uplift from recent headcount reductions.

Main reason being NT pressure on GMs given ramp dynamics, but we still increased our EPS ests and we model a 32% CAGR over next 3 yrs vs. 7% in the previous 3 yrs.

We think this should drive upward pressure in valuations, especially considering the stock is trading at ~16-17x (AH) FY28E earnings. Reiterate Buy & PT of $300 (~27.5x FY28E P/E).”

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