Oracle upgraded to Buy at Stifel on sustainable cloud acceleration

Stifel upgraded Oracle (ORCL) to Buy from Hold with a price target of $250, up from $180. The recent “dramatic step-up” in capex and remaining performance obligation gains support management’s Cloud growth expectations and these Cloud gains should generate accelerating revenue increases in coming years, the analyst tells investors. 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,” adds the analyst, who believes the combination of sustainable Cloud growth and operating expense discipline should enable Oracle to overcome the revenue mix shift headwinds and post accelerating EPS growth in FY27 and beyond.