Deutsche Bank Elevates Oracle Shares Target, Cites Robust Financial Model
In a significant move on Monday, Deutsche Bank has maintained its Buy rating on Oracle Corporation (NYSE: ORCL) and increased the shares target to $165 from the previous $150. This revision is reflective of the updated financial model which now integrates Oracle's fourth-quarter results and forward guidance.
The new target price stems from a discounted cash flow (DCF) analysis that Deutsche Bank employs. This DCF analysis utilizes a weighted average cost of capital (WACC) of 8%, a terminal risk-free rate of 4%, and an equity risk premium of 5%. The terminal growth rate is pegged at 3%, aligning with GDP growth expectations.
Key Financial Projections
The updated model has adjusted Oracle's revenue estimates:
- Fiscal Year 2025: $57.7 billion
- Fiscal Year 2026: $64.5 billion
Additionally, the revised non-GAAP earnings per share (EPS) estimates are:
- Fiscal Year 2025: $6.16
- Fiscal Year 2026: $7.00
Potential Risks
Deutsche Bank highlighted several potential risks that could impact Oracle's rating and target price, including:
- Key personnel risks
- Changes in the competitive environment
- Fluctuations in IT spending
- Challenges related to the integration of Cerner, a recent acquisition by Oracle.
Oracle's Market Presence
Oracle Corporation maintains a robust market capitalization of $379.65 billion, underscoring its significant presence in the industry. The company's P/E ratio stands at 36.27, with an adjusted P/E for the last twelve months as of Q4 2024 at 34.18. These figures suggest strong market confidence in Oracle's future profitability, even as the PEG ratio of 1.74 indicates a high P/E relative to near-term earnings growth.
Dividend Policy
Oracle's consistent dividend policy is another attractive point, particularly for income-focused investors. The company has:
- Raised its dividend for 10 consecutive years
- Maintained dividend payments for 16 consecutive years
Recent Performance
Oracle has exhibited strong recent performance, evidenced by a 1-Week Price Total Return of 10.95%. The stock trades near its 52-week high at 97% of the peak price. Analysts have also revised their earnings estimates upwards for the upcoming period, signaling potential for continued growth.
For more updates on Oracle's stock and financial performance, stay tuned to our updates.
Deutsche Bank
Oracle Corporation
This article reflects updated financial targets and an analysis from Deutsche Bank, including potential risks and market performance indicators.
