Deutsche Bank raises Oracle stock price target, emphasizes solid financial model


On Monday, Deutsche Bank maintained a buy rating on Oracle Corporation (NYSE: ) stock and raised its price target to $165 from $150 previously. The revision reflects the company's updated financial model, which now includes Oracle's fourth-quarter results and guidance.

Deutsche Bank's updated model adjusts Oracle's revenue forecast for fiscal 2025 and 2026 to $57.7 billion and $64.5 billion, respectively. Additionally, non-GAAP earnings per share (EPS) estimates for the same year have been revised to $6.16 and $7.00.

This new price target is derived from a discounted cash flow (DCF) analysis based on a weighted average cost of capital (WACC) of 8%, a terminal risk-free rate of 4% and an equity risk premium of 5%. Deutsche Bank's final growth rate using DCF is 3%, consistent with its view on GDP growth.

The analyst also noted potential downside risks to Oracle's rating and price target. These include key personnel risks, changes in the competitive environment, fluctuations in IT spending and challenges related to the integration of Oracle's recent acquisition of Cerner (NASDAQ: ).

Investment Professional Insights

Oracle Corporation (NYSE: ORCL ) has been subject to positive revisions, with Deutsche Bank maintaining a Buy rating and raising the price target to $165. In light of these developments, InvestingPro data and tips provide further insights into Oracle's performance and valuation. The company has a market capitalization of $379.65 billion, reflecting its important position in the industry. Oracle's price-to-earnings ratio is 36.27 and its trailing twelve-month adjusted price-to-earnings ratio is 34.18 through the fourth quarter of 2024. Oracle's high price-to-earnings ratio may indicate that despite its high price-to-earnings ratio, it is confident about its future profitability. Confidence relative to recent earnings growth (PEG ratio of 1.74).

InvestingPro Tip highlights Oracle's consistent dividend policy, noting that the company has raised dividends for 10 consecutive years and maintained dividends for 16 consecutive years. For income-focused investors, this could be an attractive point. Additionally, last week's significant returns highlighted the company's recent strong performance, with a 1-week total price return of 10.95% and trading near its 52-week high at 97% of its peak price. Analysts have also upgraded earnings for the period ahead, which could indicate continued growth potential.

For readers who want to gain a deeper understanding of Oracle's financial health and future prospects, InvestingPro offers a comprehensive set of additional tips. There are currently 18 InvestingPro tips for Oracle, which can be accessed by visiting: https://www.investing.com/pro/ORCL. To get an additional 10% off annual or annual Pro and Pro+ subscriptions, readers can use the coupon code PRONEWS24.

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