Key Moments
- Oppenheimer raised Oracle (NYSE: ORCL) to Outperform from Perform and assigned a $185 price target following the stock’s recent pullback.
- The firm sees Oracle as a “strong EPS compounder,” even after assuming a 25% reduction to management’s revenue outlook and projecting earnings to double by FY30.
- Despite ongoing concerns around leverage, margins, and financing needs, Oppenheimer believes valuation compression and risk mitigation now limit downside.
Rating Upgrade and Valuation Call
Oppenheimer has upgraded Oracle (NYSE: ORCL) to Outperform from Perform, citing a more compelling risk-reward profile after a sharp decline in the stock. The firm set a price target of $185, noting that the recent selloff has created what it views as an attractive entry point.
Analyst Brian Schwartz acknowledged that the timing of the call may be early, stating, “While our call may be early, since it will take time for Oracle to show financial success as a more capital-intensive business in future results, we see a favorable risk/reward after the stock’s multiples have been cut by more than half since September.”
Following the upgrade, Oracle shares were up more than 2% in premarket trading on Wednesday.
Stock Performance and Market Backdrop
The stock has fallen roughly 25% in 2026 after a pronounced downturn that started in late 2025. The slide has been driven in large part by investor unease over Oracle’s substantial spending on artificial intelligence and cloud infrastructure, together with a broader reset across software names exposed to generative AI-related disruption.
Growth Outlook and Scenario Analysis
Schwartz characterized Oracle as a “strong EPS compounder,” emphasizing that his base-case modeling incorporates a 25% reduction to management’s revenue guidance while still anticipating that earnings will double by fiscal year 2030 (FY30).
Oppenheimer’s scenario analysis outlines the following earnings trajectories through FY30:
| Scenario | EPS CAGR through FY30 | Projected Pro-forma EPS in FY30 |
|---|---|---|
| Base case | 20% | $12.66 |
| Bull case | Roughly 30% | $17.79 |
Even under what Schwartz describes as discounted assumptions, he believes Oracle ranks in the “upper echelon among large cap companies and software peers for EPS growth.”
Drivers Behind the Upgrade
The analyst highlighted several factors underpinning the more constructive stance. These include reduced counterparty, financing, and execution risks, supported by recent capital-raising initiatives and notable customer wins such as OpenAI and TikTok. He added that Oracle remains “relatively immune from AI disruption” and is “broadly underowned by institutional investors.”
Risks, Skepticism, and Required Execution
Schwartz also stressed that investor caution continues to be justified. Key concerns include balance sheet pressures, margin compression related to AI-driven investments, elevated counterparty risk, and the substantial financing necessary to fund Oracle’s infrastructure expansion.
He described the company as a “show me stock” that must deliver steady execution to alter market perception.
At the same time, Schwartz argued that downside risk is better contained at current levels, pointing to mitigation of certain risks and significantly compressed valuation multiples. In his view, these elements could support a future improvement in sentiment as Oracle demonstrates progress on its transformation.
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