Barclays analysts upgraded Oracle (NYSE:ORCL) to Overweight from Equal Weight with a price target of $150 per share (up from $126).
“We see a multi-year 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,” the analysts said in a client note.
They believe that the mix effect “should continue to help growth for years to come.”
“We believe these levels can be maintained in the out years as the positive mix effect still has a long way to go.”
Barclays analysts are also positive about the AI opportunity.
“We also think OCI is positioned favorably for AI workloads given their close relationship with Nvidia (NASDAQ:NVDA) and being one of the 1st CSPs to come to market with Nvidia’s SaaS products. As such, we think,” they added.
Oracle stock should also receive a boost from estimates that are expected to move higher over the coming years.
“We also think valuation is not overly demanding at ~20x CY24E P/E and leaves room for a continued re-rating of the multiple.”
Oracle shares rose almost 2% in early Tuesday trade.