Jefferies sees upside for Oracle stock on strong RPO momentum

Investing.com -- Jefferies analysts maintained a Buy rating on Oracle (NYSE: ORCL) in a note Monday, raising their price target for the stock to $200 from $190 a share.

The firm told investors that it is seeing "more upside on RPO momentum" despite the stock lagging peers year-to-date.

Their proprietary survey suggests "F4Q demand was stable, though C2H25 expectations were impacted by macro."

Jefferies highlights that "RPO growth has been a bright spot for ORCL over the last four quarters," with expectations of "stronger seasonal bookings in F4Q (St at 40% growth or $137B)."

Importantly, the analysts note that "upside to backlog&revenue from Stargate has not yet been included in guidance."

They note that Oracle anticipates component delays slowing cloud capacity expansion to ease in F1Q26, which should support "greater than 50% IaaS growth in FY25 and drive ’likely a lot faster’ growth in FY26."

While Oracle currently trades at a premium 31x CY26 P/E, Jefferies believes there is "room for the stock to grind higher if backlog growth starts to translate into revenue growth."

Their survey of Oracle partners indicated that 65% "either hit or exceeded their plans in F4Q," and 45% cited "q/q pipeline improvement."

However, 60% of partners noted "OCI capacity constraints in F4Q," and partners expect "modest macro headwinds to both growth and pipelines."

Jefferies concludes that they "continue to favor ORCL through 2H25 given leading indicators that point to an inflection in both OCI and backlog over the next few quarters as power capacity grows, capacity constraints ease, and Stargate gets embedded into numbers."

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