Jefferies Raises Oracle Price Target

Investing.com — Jefferies on Thursday raised its target price on Oracle Corporation (NYSE:ORCL) to $220 from $190, citing improvements in its pipeline driven by infrastructure growth and AI initiatives.

Oracle's shares have gained roughly 80% this year, and analysts suggest they could climb further if backlog momentum translates into revenue growth.

Jefferies noted Oracle needs to deliver strong metrics, including:
– 52% growth in Oracle Cloud Infrastructure (OCI)
– 9% revenue growth
– 43% operating margins

These metrics are crucial to meet market expectations. According to Jefferies, infrastructure growth is expected to offset lower application growth. A survey of 20 Oracle partners revealed optimism for fiscal 2024, with 70% of them meeting or exceeding their second-quarter plans. Partners have also reported improvements in the pipeline and see AI initiatives as a key driver of future growth.

The note stated, "Customers have shifted their focus from cloud cost optimization back to modernizing their workloads for AI."

Despite trading at a premium valuation of 38 times estimated 2025 GAAP earnings per share, compared to Microsoft’s 32 times, Jefferies has maintained a “buy” rating on Oracle and updated its price target to $220. Analysts emphasized, "Oracle will also need to start converting backlog to revenue for the stock to continue working."