Oracle Stock Beyond TikTok: Cloud, Databases and Growth

Oracle is in limelight after President Trump reportedly approved the company’s deal with TikTok. Oracle played a masterstroke by initiating a deal with ByteDance, outplaying Microsoft and other rivals.

Investment firm RBC recently upgraded Oracle stock from Sector Perform to Outperform and set a price target of $68. The firm believes that the deal would be highly beneficial for Oracle’s Cloud business.

On September 11, Piper Sandler’s analyst Brent Bracelin maintained a Neutral rating for the stock but raised his price target to $50, citing growth in recurring revenue.

The analyst also said that there is a strong evidence suggesting Oracle’s return to sustainable growth.

On the other hand, investment firm Cowen's analyst J. Derrick Wood gave an Outperform rating for Oracle stock with a price target of $70. The analyst expects a new product cycle at Oracle which will be an “engine” of growth for the company.

Cloud Dominance?

Earlier in September, Oracle beat estimates for the fiscal first quarter results. The company won major customers in the period, including McDonald's and Albertsons, who are moving to Oracle systems for their financial and infrastructure software requirements.

However, it’s important to note that Oracle is nowhere close to beating big players like Amazon or Microsoft in the Cloud market. The company is clearly making a shift away from that race and focusing on Cloud business applications and database. This will help the company streamline its operations and set the expectations of investors on the right course.

Morgan Stanley's Keith Weiss also increased his price target for Oracle after the company’s strong fiscal first-quarter results. The analyst said that Oracle “bounced back” from its fourth quarter slowness amid a rise in licensing growth.

Oracle's non-GAAP net income in the first quarter jumped 4% to $2.9 billion, while non-GAAP earnings per share were up 15% to 93 cents. Revenue in the period increased by 2% to reach $9.37 billion.

Strong Finances and Dividend

Oracle's financial situation is also strong. As of the end of the fourth quarter, Oracle had $37.2 billion in cash and equivalents, while its liabilities stand at $17.2 billion.

Oracle is also a great dividend stock. The company currently pays a forward yield of 1.7%. The company has also bought back $19.2 billion in shares over the past 12 months, and spent $3.1 billion on dividends. On Sept. 10, Oracle declared a dividend of $0.24 per share.