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“We believe that the recent pullback (-13% since F1Q) simply creates a more interesting entry point for a business that is now in a better position to deliver more consistent revenue and earnings growth due a higher % of revenue coming from its cloud solutions,” analysts wrote in an upgrade note.
The apps and infrastructure cloud businesses have reached a sizeable portion of revenue, which is expected to drive total revenue growth in the high single digits in the future, the analysts also noted.
Oracle Cloud Infrastructure (OCI) represents a potential long-term growth opportunity, with estimated growth rates (50% CAGR from FY23-26) that could prove conservative. The macroeconomic environment is favorable to integrated software suites, which should support steady growth in Oracle’s applications segment and potentially drive database/OCI revenue as legacy customers transition to the cloud.
Analysts also flag that current estimates for FY26 provide room for upside relative to Oracle’s guidance, indicating potential for strong performance.
“The current valuation leaves room for upside if Oracle can show consistent revenue growth and margin expansion,” the analysts concluded.
Oracle shares are up 1.1% on the upgrade.
