Shares of Oracle Corp (NYSE:ORCL) tanked on Thursday even after the software company reported upbeat fiscal third-quarter results.
Here are some key analyst takeaways from the event:
- Piper Sandler analyst Billy Fitzsimmons maintained an Overweight rating, while lifting the price target from $210 to $225.
- Goldman Sachs analyst Gabriela Borges reiterated a Buy rating, while raising the price target from $228 to $239.
- Guggenheim Securities analyst John DiFucci reaffirmed a Buy rating and price target of $400.
- BofA Securities analysts maintained a Buy rating and price target of $240.
Check out other analyst stock ratings.
Piper Sandler: Oracle's RPOs (remaining performance obligations) grew 363% year-on-year to $638 billion. The company reported 325% growth in the previous quarter, exceeding the consensus estimate of $601 billion. Fitzsimmons said this represents a net backlog build of more than $85 billion on a sequential basis.
Large-scale AI contracts, with prepaid and customer-supplied hardware portions, drove a majority of the RPO growth. These contracts reached $75 billion, the analyst stated. Management maintained its revenue guidance of $90 billion for fiscal 2027. It raised its non-GAAP earnings guidance to $8.05 per share from its prior forecast of $8.00 per share, he noted.
Goldman Sachs: Oracle's stock came under pressure due to the "slim" beat in the quarterly results and Oracle raising its capex guidance to $90-$95 billion, Borges said. The company's higher capex projection is linked to its elevated funding needs, which reinforces concerns around the duration and funding of its capacity ramp, she added.
"We think the underlying funding is somewhat better than headline optics suggest, with ~$20-25B of customer prepayments and increasing use of BYOC (bring your own cloud) structures reducing net cash outlay to ~$70B and shifting part of the capital burden to customers," the analyst wrote. Stock moves going ahead may be linked to the speed of Oracle's capacity ramp and the incremental supply translating into RPOs and profits, she further stated.
Guggenheim Securities: Oracle's RPOs grew $85 billion to $638 billion, "partially due to four customers of $8B or more, which we believe continues to result in materially less customer concentration," he wrote.
Oracle raised its capex outlook to $90-$95 billion, although $20-$25 billion of this will come from upfront customer payments, the analyst stated. The company indicated that it plans to raise around $20 billion of incremental debt in fiscal 2027, while it has not yet sold equity worth $20-$25 billion that it had previously announced to meet its capital requirements, he further noted.
BofA Securities: The highlight of the quarter was the 93% year-on-year growth in Cloud IaaS/PaaS and the $85 billion increase in RPO. This reinforces visibility into future revenue, analysts said. They added the other key readouts from the print as:
- Revenue grew 20.6% year-on-year, topping Street expectations of 20%
- Cloud revenue growth missed expectations by 130 basis points (bps)
- Operating margins of 44.8% beat Street’s 43.4%
- Non‑GAAP earnings of $2.11 per share came higher than consensus of $1.97 per share
FY27 capex guide is expected at $93 billion, or $70 billion on a net cash outlay basis. This underscores the capital-intensive nature of the buildout, the analysts wrote. They further stated that the company's free cash flows could remain negative through fiscal 2029.
ORCL Price Action: Shares of Oracle had declined by 11.97% to $178.16 at the time of publication on Thursday.
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