On Thursday, UBS demonstrated confidence in Oracle Corporation (NYSE:ORCL), increasing the company's price target to $130.00 from $125.00, while reiterating a Buy rating. The adjustment comes as anticipation builds for Oracle's third-quarter earnings report, scheduled for March 11th.
UBS's decision follows a series of discussions which included insights from customers, a major partner, and industry analysts, aimed at assessing demand trends for Oracle's offerings.
The feedback received by UBS painted a generally positive picture, with Oracle's spending growth reportedly aligning with the higher end of customer IT budget growth rates for 2024. This perspective was reinforced by one of Oracle's largest partners, who noted a revival of modernization projects that had previously been paused.
Despite mixed macroeconomic signals and potential challenges in scaling Oracle Cloud Infrastructure (OCI), no significant concerns were raised that might impact the company's performance.
Regarding OCI, it was noted that Oracle's discounting in competition with Amazon (NASDAQ:AMZN) Web Services (AWS) and Azure might be less aggressive than some expect. Moreover, the consensus among those consulted was that Oracle is managing its capacity expansion challenges effectively. This sentiment is particularly relevant as cloud infrastructure services are a critical area of growth for major technology firms.
The feedback on Oracle's Software as a Service (SaaS) offerings was also slightly positive. A significant SaaS partner highlighted a surge in its Oracle ERP practice and increased interest in ERP/Financials projects, areas where Oracle is traditionally strong. This contrasts with Human Capital Management (HCM) projects, where Workday (NASDAQ:WDAY) is a known leader.
Additionally, on the database front, a large customer indicated a shift in priorities that favors maintaining their Oracle databases over transitioning to alternatives like Postgres. This customer is now focusing more on investments in artificial intelligence, suggesting a continued reliance on Oracle's database technologies.
UBS's price target increase reflects a belief in Oracle's ability to navigate current market conditions and capitalize on its strengths in the technology sector.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.