Oracle price target raised to $226 from $190 at BNP Paribas Exane

Following strong fiscal fourth-quarter results, BNP Paribas Exane raised its price target on Oracle to $226 from $190, maintaining an Outperform rating. Oracle reported better-than-expected revenue and EPS, with total revenue at $55.78 billion and a gross profit margin of 71.12%, leading to increased fiscal year 2026 revenue guidance of 16% constant currency growth, driven by projected OCI growth exceeding 70%. Several other firms, including UBS and Cantor Fitzgerald, also raised their price targets, citing significant backlog growth and strong IaaS guidance, while Morgan Stanley maintained an Equalweight rating, noting mixed signals despite long-term EPS growth potential.

Analysis

Oracle's fiscal fourth-quarter 2025 results contributed to a strong full-year performance, with the company reporting better-than-expected revenue and earnings for Q4. For the fiscal fourth quarter of 2025, total revenue was $15.9 billion, an 11% year-over-year increase in constant currency, while full fiscal year 2025 revenue reached $55.78 billion, accompanied by a healthy gross profit margin of 71.12%. This performance underpins the company's upgraded fiscal year 2026 revenue guidance to over $67 billion, representing approximately 16% growth. A primary catalyst is Oracle Cloud Infrastructure (OCI), which grew 62% year-over-year in Q4 FY25 and is projected by Oracle to exceed 70% growth in fiscal year 2026. BNP Paribas Exane further projects OCI's annualized revenue could reach $20-25 billion by FY26-end, a substantial uplift from a $12 billion level associated by the firm with OCI in the fourth quarter, with AI infrastructure potentially forming 40% of IaaS revenue. Oracle's overall remaining performance obligation (RPO) growth is guided to surpass 100%, aiming to approach Microsoft's RPO scale. Analyst sentiment is predominantly positive, evidenced by a 0.85 sentiment score for Oracle, with multiple firms including BNP Paribas Exane (target $226), UBS (target $225), and Cantor Fitzgerald (target $216) raising price targets, citing strong IaaS guidance and AI-driven demand, including Oracle's involvement in the Stargate project. However, with the stock trading near its 52-week high of $198.31 (analyst targets range $135-$246), InvestingPro data suggests a valuation above Fair Value, and Morgan Stanley maintained an Equalweight rating ($175 PT) due to mixed Q4 signals despite acknowledging long-term EPS potential.

Key Decisions for Investors

• Given Oracle's robust Q4 FY25 performance, strong full-year results, and upwardly revised FY26 guidance driven by accelerating OCI growth and AI demand, investors might view the company's growth trajectory positively, though current share prices near 52-week highs warrant careful consideration of entry points.
• Investors should closely monitor OCI's actual revenue growth against its ambitious >70% FY26 target and the realization of its >100% RPO growth, as these are critical to justifying the current valuation and achieving the projected $20-25 billion OCI annualized revenue highlighted by analysts.
• The divergence in analyst ratings, with most bullish but Morgan Stanley maintaining an Equalweight stance, alongside InvestingPro's indication of a valuation above Fair Value, suggests a need for due diligence on whether the significant future growth in OCI and AI is already fully priced into the stock.