Oracle ‘Now Attractively Valued,’ Upgraded at Exane
2022.06.29 23:01
Oracle (ORCL) ‘Now Attractively Valued,’ Upgraded at Exane
By Sam Boughedda
Shares of Oracle (NYSE:ORCL) were upgraded to Outperform by analysts at Exane on Wednesday, with its price target raised by 14% to $90 per share, representing a potential 31% upside.
The firm stated the stock is “now attractively valued, offering defensive growth and high profitability.”
“We had been cautious ahead of the FQ4 results considering the license risk, the Cerner (NASDAQ:CERN) guidance risk, and the risk to the double-digit growth guidance for FY’23. Now that Oracle successfully managed FQ4 (with the help of two mega deal), de-risked the Cerner guidance as well as the overall guidance for FY’23, we raise to Outperform,” Exane said. “Oracle Cloud Infrastructure emerging as the main growth driver Oracle has guided for growth in its Cloud businesses (about 30% of revenues) to accelerate from 22% growth in ’22 to 30%+ in ’23, led by Oracle Cloud Infrastructure, which is seeing accelerated adoption within the installed base.”
The analysts said the risk-reward for the stock is now compelling, while its recent EuroVision Reseller Channel Check Survey is also more supportive for Oracle.
“With Oracle down 32% from its peak, the shares now trade on 12x forward EV/EBITA. While this is not far from the historic average, Oracle is now growing much faster. Oracle’s EBITA was ~USD15-17bn annually from FY2013-2022. We now expect EBITA to grow to USD22bn by FY’25. Revenue growth is accelerating from a 2% CAGR over 10 years to 7%+ over the next three years.”
