- Keybanc analyst Michael Turits maintained Oracle Corp (NYSE:ORCL) with an Overweight and raised the price target from $80 to $94.
- The re-rating came ahead of F2Q earnings Monday.
- Consistent with Turits’ recent upgrade, the analyst viewed Oracle as a defensive investment in a challenging macro and long-term “cloud re-rating” story.
- Turits saw the opportunity for continued MSD-HSD% CC revenue growth led by Oracle’s high growth backoffice SaaS and cloud OCI segments, with continued at least MSD database growth.
- Turits expected EBIT margins to expand, with Cerner moving from the low 20s toward Oracle’s mid-40s standalone margins and increasing efficiencies in cloud apps and infrastructure, mainly offsetting the pressure on gross margins from the mix shift to the cloud.
- While 3Q software earnings have included several meaningful guides down for CY23, Turits was encouraged by solid backoffice results from WDAY and other HCM vendors and better-than-expected data results from MongoDB, Inc (NASDAQ: MDB) and Confluent, Inc (NASDAQ: CFLT).
- With the 3Q deceleration in Microsoft Corp (NASDAQ: MSFT) Azure and Amazon.com Inc (NASDAQ: AMZN) AWS this quarter, Turits was cautious on OCI but viewed Oracle’s smaller and more opportunistic cloud business as less exposed to a broader cloud operating expenditure pressure.
- Turits saw the opportunity for ORCL to re-rate at less than the current 15% P/E discount to the S&P as its SaaS and OCI businesses continue to show sustained growth.
- Price Action: ORCL shares traded higher by 0.70% at $80.42 on the last check Monday.
8 Analysts Have This to Say About UnitedHealth Group
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