Oracle Corp (NYSE:ORCL) shares are trading lower on Monday after several analysts cut their price targets ahead of the company’s fiscal third‑quarter earnings, which are due after Tuesday’s close.
- Oracle stock is feeling bearish pressure. Why is ORCL stock falling?
AI Growth Vs Margin Headwinds
Barclays analyst Raimo Lenschow said Oracle’s third-quarter should show “meaningful AI‑driven revenue acceleration,” but he also warned that the same growth will likely squeeze margins due to upfront costs and the timing of lease expenses tied to new capacity coming online, Investing.com reported.
He expects AI revenue to come in slightly ahead of consensus, helped by additional capacity added in quarter-three and more favorable foreign‑exchange trends. Still, he cautioned that gross margins and EPS could face short‑term headwinds as Oracle ramps up its infrastructure footprint.
Investors May Be Split On The Results
Lenschow noted that this setup could divide investors. Bulls will focus on Oracle’s strengthening momentum in AI, while bears will point to margin pressure as a reason for caution. He added that the third-quarter is unlikely to settle the debate either way, even if revenue surprises to the upside.
He also argued that the market misunderstands Oracle’s AI‑infrastructure strategy. He said investors should view major AI deals as a series of data‑center agreements that resemble project‑finance structures, giving Oracle flexibility to adjust capacity and timelines without overcommitting capital.
What Do Other Analysts Have To Say?
Oracle recently maintained its favorable ratings from multiple financial institutions, although some have reduced their target prices. On March 9, Deutsche Bank maintained its Buy rating but lowered the target price to $300 from $375. On the same day, Scotiabank also maintained its Sector Outperform rating but slightly reduced the target from $220 to $215.
Earlier, on March 6, Jefferies also stood by its Buy rating for Oracle, albeit reducing the target price from $400 to $320. TD Cowen followed suit, maintaining its Buy rating but slashing the target price to $250 from $350. These recent analyst actions indicate a generally positive outlook for Oracle, despite the lowered price targets.
ORCL Price Action: Oracle shares were down 2.90% at $148.53 at the time of publication on Monday, according to Benzinga Pro.
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