Oracle upgraded to Buy at Wolfe Research ahead of earnings
Cristi Croitoru/iStock Editorial via Getty Images
Oracle Corporation (NYSE:ORCL) fielded an upgrade on Monday as Wolfe Research voiced confidence in the company’s ability to provide upbeat guidance after the bell on Monday.
In particular, the firm’s analysts see upside from its cloud business, which it expects will “become the engine that accelerates top and bottom line growth for the company over the next three years.” The team sees Oracle (ORCL) rapidly picking up market share from its presently modest base through the close of 2025, adding to its early mover advantage in Generative AI.
“The reason we are doing this upgrade before earnings is not because we are making a call on the quarter, but rather we see the potential for a solid 4Q report coupled with AI narrative tailwinds to drive a narrative re-rating from today's high teens EPS multiple to somewhere closer to the mid-20's,” the analysts advised. “We see a top line beat driven by Cloud outperformance, as well as a potential 1Q guide ahead of consensus.”
The team concluded that while they had previously voiced caution on the progress of the cloud business, the “consistently improving tone of our checks has become impossible to ignore,” according to the team. Key partnerships with Microsoft and Nvidia also add to bullishness,
The team upgraded the stock to Outperform and assigned a $130 price target to the name. Shares of Oracle (ORCL) rose 4.18% in premarket action on Monday.