Jefferies reiterated a Buy on Oracle with a $400 price target, calling the recent ~34% pullback from the Sept. peak — despite a 33% year-to-date gain — an attractive risk/reward as the company approaches fiscal Q2 results; the target implies substantial upside from current ~$222. The firm’s proprietary survey shows only a slight quarter-on-quarter uptick in infrastructure, apps and AI pipelines, but Jefferies still models remaining performance obligations above $520bn, Oracle Cloud Infrastructure growth near 74%, Q2 revenue growth around 16% (company guidance 14–16%), and organic cloud revenue ex-currency accelerating to 32–36%. Key positives include a large, long-dated backlog (over 90% beyond 12 months and $65bn of additional OCI backlog booked ex-OpenAI) and a valuation near 23x EV/CY26 EBIT; key risks are heavy near-term capex and funding needs (net debt ~$80bn, possible $38bn raise), and margin pressure from a shift into lower-margin AI infrastructure despite management’s 30–40% AI infra gross margin guidance, with Jefferies forecasting non-GAAP operating margins bottoming near ~32% in FY28.
Jefferies reiterated a Buy on Oracle with a $400 price target, implying material upside from the article's stated current share price of ~$222 and despite a 33% year-to-date gain; the firm highlighted a ~34% pullback from the Sept. 10 peak that erased $322 billion in market capitalization as an attractive risk/reward into fiscal Q2. Jefferies models remaining performance obligations (RPO) above $520 billion, forecasts Oracle Cloud Infrastructure (OCI) growth of 74%, and expects operating margins at 42% for the quarter, while valuation sits near 23x EV/CY26 EBIT, roughly in line with Microsoft. Jefferies' proprietary survey showed only a slight quarter-on-quarter uptick in infrastructure, applications and AI pipeline growth, with company fiscal Q2 guidance of 14–16% revenue growth versus Jefferies' 16% estimate and projected organic cloud revenue ex-currency accelerating to 32–36% from 27%. Consensus IaaS revenue is expected to rise 74% year-over-year in Q2, up from 55% in Q1, indicating strong OCI momentum but not a breakout; management disclosed $65 billion of additional OCI backlog booked in the quarter excluding OpenAI. Key risks are financing and near-term margin pressure: Oracle ended fiscal Q1 with roughly $80 billion in net debt and has reportedly discussed raising up to $38 billion to support data-center construction, creating a timing mismatch between upfront capex and delayed monetization. Management clarified AI infrastructure gross margins of 30–40% versus speculation of mid-teens, yet Jefferies projects non-GAAP operating margins to bottom near ~32% in FY28. Investors must weigh the large, long-dated backlog (over 90% beyond 12 months) and OCI growth against capital-raise and margin execution risk.
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