A lot has happened in the world of CRM, the cloud and AI in recent years. Almost all of the investor focus seems to be focused on NVIDIA, Microsoft, Meta, Amazon, Salesforce, Google, OpenAI and a few other companies. It was easy to forget about or overlook Oracle Corporation (NYSE: ORCL). The reality is that Oracle is just a name that investors do not hear about as much as the other companies. What a mistake — Oracle shares just surged to all-time highs!
Oggonomics is always looking for new ideas whether the markets are rising or falling. It’s part of long-term investment plans. And it is also worth noting that September is historically the worst month of the year for stocks, with October also being a dud historically. But Larry Ellison and Oracle have apparently yelled “Damn the torpedoes, full speed ahead!”
Before earnings sent Oracle’s shares to even higher new all-time highs in recent days, this stock was stuck in a $130 to $142 trading range for most of the last three months ($125 to $145 on the hi/low ranges). Now its stock is up to $160 after the post-earnings reaction.
Oggonomics wants to know if there is any room left for Oracle to keep rising. It is always a possibility that there is a significant back-and-fill move if the market’s history of September to October holds true in 2024. Then again, many technical investors live by the mantra that “stocks hitting new highs usually keep hitting new highs.” It’s the more fun version of a technical breakout.
Oracle is now valued at $444 billion. That’s quite impressive enough, but we now live in a world with multiple technology giants now being worth over $1 trillion. At $160, the stock is valued at $25-times 2025 consensus EPS and about 22-times 2026 consensus EPS. Oracle is expected to show nearly 20% revenue growth in fiscal year 2025 and over 11% revenue growth in fiscal year 2026. And from May 31, 2021 to the May-2024 fiscal year the total revenue growth has been nearly 31% in total.
Is Oracle now priced for perfection or will the Wall Street analyst estimates of strong revenue growth pan out over the next 18 to 24 months?
THE ANALYST BRIGADE
Oggonomics does not have a formal rating nor a formal price target for Oracle shares. Many analysts on Wall Street have raised their price targets in the wake of its solid earnings report. Keep in mind that Oracle’s stock had closed down 1.3% at $139.89 ahead of earnings and the initial reaction up almost 8% at $151.00 was last seen about $10 per share less than at the present time. Again, stocks hitting new highs tend to keep hitting new highs (until they don’t!).
Below is a grouping of analyst call summaries that have been seen since the report broken down by positive and neutral style ratings. The one trend outside of formal ratings was a steady flow of much stronger price targets ahead. Here are the Neutral/Hold ratings first:
- BofA Securities reiterated its Neutral rating and raised its price objective to $175 from $155.
- BMO Capital Markets reiterated its Market Perform rating and raised its price target to $173 from $160.
- Citi maintained its Neutral rating and raised its target to $157 from $140.
- DA Davidson reiterated its Neutral rating and raised its target to $140 from $105.
- Morgan Stanley reiterated its Equal-Weight rating and raised its target to $145 from $125.
- Stifel reiterated its Hold rating and raised its target to $155 from $135.
And…
- Barclays reiterated its Overweight rating and raised its target to $172 from $160.
- Evercore ISI reiterated its Overweight rating and raised its target to $175 from $160.
- Jefferies reiterated its Buy rating and raised its target to $170 from $150.
- JMP Securities raised Oracle to Market Outperform from Market Perform with a $175 price target.
- KeyBanc Capital Markets reiterated its Overweight rating and raised its target to $175 from $165.
- Mizuho reiterated its Outperform rating and raised its target to $185 from $170.
- Piper Sandler reiterated its Overweight rating on Oracle and raised its target to $175 from $150.
- TD Cowen reiterated its Buy rating and raised its target to $180 from $165.
- UBS reiterated its Buy rating and raised its target to $175 from $160.
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If, then…
So far there have not been any significant analyst downgrades nor any significant calls to sell Oracle in this mix. There may have been some of the cautious calls elsewhere but this is 15 analyst report summaries seen and all were accompanied by higher price targets.
IN THE END…
Again, Oggonomics does not issue formal Buy, Sell, Hold ratings and does not have formal price targets. Oracle trades at a discount to its peers and its shares have not generally been considered to be the more explosive technology stock leader in recent years. It’s enough to make one wonder how the shares have risen by more than 150% in just the last two years. Its shares are up a sharp 52% year-to-date.
While no formal opinion is being offered here for where the stock’s value may go over the next 30, 90, 180, 365 days, there are two views that immediately come to mind here for overlooking or missing Oracle — envy and remorse.
