Bernstein tech analyst calls Oracle his top investment idea
Published Thu, Sep 12 2024•10:25 AM EDT
Sean Conlon @SeanAustin96
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Seeing more upside ahead, Bernstein has named Oracle a “top investment idea” for investors seeking to play the cloud trade. With an outperform rating on the stock, the firm has a price target of $175, which implies more than 11% upside from Wednesday’s close. Bernstein’s call comes after the stock has already seen major gains this week. On Tuesday, Oracle jumped more than 11% following better-than-expected first-quarter earnings , putting its shares at a 49% gain year-to-date. Its performance this year trails only Nvidia among megacap tech names. ORCL YTD mountain Oracle, year-to-date In a Thursday note, analyst Mark Moerdler cited Oracle’s customer mix and the quality of its workloads – both of which offer downside protection – as key to the call. “Oracle offers an expanding range of offerings that help meet the specialized requirements of a portion (and likely a large portion) of the market that are not served by the traditional approach of their peers,” the analyst said, adding that the company’s cloud infrastructure likely has an option “that meets your need.” “One should not underestimate either the opportunity set or the differentiation of Oracle’s offering,” he continued. Moerdler expects Oracle’s product and services to lead to increasing revenue growth. He noted Oracle’s announcement that its cloud revenue had reached a $2.1 billion run rate, which is higher than the $2 billion earned in the prior quarter. Yet, he said that it’s “only the start.” Beyond that, the analyst sees an opportunity to outpace expectations as its database moves to the cloud and sustained or improving margins as it leverages operating improvements. Plus, Oracle’s approach to security, specifically its shift away from using passwords, is just the “tip of the iceberg,” Moerdler said. “We have watched as Microsoft has quietly become the largest security software/Cloud provider, and now we are seeing some fascinating security capabilities/offerings from Oracle,” he said. “Watch out security vendors, Oracle is coming.” |
