Stifel analyst Brad Reback has upgraded Oracle shares from “hold” to “buy,” emphasizing the company’s promising trajectory in sustainable cloud growth. Following the upgrade, he raised the price target for Oracle from $180 to $250 per share, indicating a potential upside of 19% based on Friday’s closing price. The excitement surrounding Oracle is evident; shares have surged by 26% in 2025 alone, signaling strong investor confidence.
Reback highlights that Oracle’s cloud acceleration is not only impressive but appears sustainable. He forecasts that for the next two fiscal years, Oracle’s total cloud revenue could see growth in the high 30% range, a significant driver of future gains. In his analysis, Reback notes, “The recent dramatic step-up in capex and RPO gains support management’s Cloud (Infrastructure + SaaS-Apps) growth expectations,” suggesting that these developments will lead to substantial revenue increases, projected at around 16% for FY26 and 20% for FY27.
The analyst also pointed out that Oracle is reaping the benefits of recent spending cuts and a concerted effort from management to enhance operational efficiency. Last year, the company’s total revenue grew by 8%, while headcount and total operating expenses saw minimal increases of 2% and 5%, respectively. Reback remarked, “While the higher capital spending will lead to additional near-term gross-margin compression, there is no question this management team is extremely adept at managing expenses.” He believes that shifting the focus towards physical infrastructure rather than expanding personnel will allow Oracle to achieve revenue growth that outpaces operational expenses in the years to come.
As Oracle continues this strategic shift, Reback predicts the company will become increasingly less reliant on expanding its workforce for growth. This balanced approach to spending and cloud growth is expected to culminate in accelerating earnings growth starting in 2027. Following the upgrade, Oracle shares experienced a 2% increase, showcasing the market’s positive reception.
With a robust cloud strategy and disciplined spending, Oracle appears poised for significant long-term growth, making it a compelling investment opportunity for shareholders. As the cloud landscape evolves, Oracle’s ability to adapt and thrive under proficient management could further enhance its market position, suggesting that investors should keep a close watch on this tech giant.
In summary, Stifel’s positive outlook on Oracle underscores its sustainable cloud growth potential, high revenue forecasts, and effective management strategies. The significant price target increase reflects an optimistic future as Oracle continues to navigate the complexities of the tech landscape.
Original Source: https://www.cnbc.com/2025/06/30/buy-this-tech-stock-as-cloud-business-growth-accelerates-stifel-says.html
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Publish Date: 2025-06-30 17:06:00
