Oppenheimer believes that a sharp recent pullback in Oracle has created an attractive risk-reward balance for investors. The financial institution upgraded the tech old guard to an outperform rating from perform. Oppenheimer also initiated a price target of $185, implying an upside of 27%. Shares of Oracle have slipped 13% over the past 12 months and 25% this year alone, leading to an attractive entry point, Oppenheimer analyst Brian Schwartz wrote. ORCL 1Y mountain ORCL 1Y chart “While our call may be early, since it will take time for Oracle to show financial success as a more capital-intensive business in future results, we see a favorable risk/reward after the stock’s multiples have been cut by more than half since September,” he wrote. The analyst called Oracle a “superior earnings per share compounder,” which should further “catalyze better investor sentiment and trigger greater appreciation for the stock.” In his bull and base cases, he sees Oracle’s earnings per share respectively tripling and doubling by fiscal year 2030. The company is also successfully mitigating its risk profile, especially the counterparty concerns tied to OpenAI. Schwarz believes that these risks are easing amid major funding plans and renewed momentum. The analyst added that Oracle’s recent capital-raise announcements are expected to support cloud infrastructure growth, which are relatively insulated from artificial intelligence-driven disruption. “Oracle must prove success in transitioning to a capital-intensive business through strong FTM revenue and EPS growth. However, downside at current levels looks more protected than other software companies since the intensity of the risks overhanging ORCL is mitigating, it is relative immune from AI disruption since its non-financials/ERP apps business is only a small portion of the revenue mix, and multiples have already meaningfully compressed,” Schwartz said.
