Why Oracle Stock Blasted Higher on Tuesday
What happened
An analyst's recommendation upgrade was the motor that drove Oracle (NYSE: ORCL) stock higher on Tuesday. Shares of the veteran database software specialist and cloud services provider closed the day a bit over 2% in the black, contrasting favorably with the 0.4% decline of the S&P 500 index.
So what
Barclays prognosticator Raimo Lenschow is now officially an Oracle bull. Before market open on Tuesday he upped his recommendation on the tech stock to overweight (read: buy); previously he had tagged it as equal weight (hold). Accompanying this was a price target rise, to $150 per share from the preceding $126.
Like other analysts, Lenschow feels there is quite a bit of potential in Oracle's relatively recent next-generation services.
Referring to the company's software-as-a-service (SaaS) and Oracle Cloud Infrastructure (OCI) offerings, he wrote in a new research note, "We see a multiyear opportunity for solid growth at high margins driven by an ongoing positive mix effect of better SaaS and OCI outweighing the lower growth parts of the business."
Lenschow also waxed enthusiastic about Oracle's opportunity with artificial intelligence (AI), the current hot segment of the tech industry. In his note, the analyst said that OCI is "positioned favorably," for such applications; additionally, the company has a close relationship with Nvidia, the chipmaker that has done very well lately with a product lineup seen as a good fit for AI functionalities.
Now what
The Barclays analyst is not the only market professional who's optimistic about Oracle. On average, analysts tracking the stock are expecting the company to boost both revenue and per-share profitability by around 8% this year over fiscal 2023. The following fiscal year, the growth rate for revenue should be similar, while that for profitability is expected to be a juicy 13%.
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Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Nvidia and Oracle. The Motley Fool recommends Barclays Plc. The Motley Fool has a disclosure policy.
