CFRA Maintains Hold Recommendation On Shares Of Oracle Corporation

We up our 12-month target to $150 from $142, on a P/E of 22x our CY25 EPS estimate of $6.80, above historical/below peers. We keep our FY25 (May) EPS at $6.29 and start FY26 at $7.08. ORCL posts May-Q EPS of $1.63 vs. $1.67, missing the $1.65 consensus. Sales rose 3%, as 20% growth from cloud services was largely offset by declines in licenses, hardware, and services. Infrastructure-as-a-Service (IaaS) grew +42%, now 14% of sales (run rate doubled in the last seven Qs) and is benefiting from large-scale deals (+30 AI sales contracts for over $12.5B; Open AI deal to train ChatGPT adds credibility). RPO rose an impressive 44% to $98B (+29% in Feb-Q), driving its backlog and will allow ORCL to grow +10% in FY25. Applications decelerated to 10% but Cerner headwinds to ease. The Google Cloud partnership is poised to aid database services revenue, which could add another leg to growth. Although we see capex spend doubling in FY25 to $14B and note net debt of $76B, margins/FCF will benefit from greater OCI scale/mix.

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