Oracle Stock Rises as Piper Sandler Upgrades, Noting the Possibility of Higher Margins

Oracle Stock

Oracle stock is trading at $68.34 as of 12:04 PM EDT.  

Oracle stock (NYSE:ORCL) increased on Thursday as Piper Sandler upgraded the leading provider of IT services, stressing the possibility of higher margins now that operating margins have fallen to an eight-year low.

With operating margins below 40% and gross margins at 74.5%, analyst Brent Bracelin changed his recommendation from underweight to neutral, saying that the Cerner acquisition and the business’ ongoing shift to the cloud are contributing factors. With operating margins below 40% and gross margins at 74.5%, analyst Brent Bracelin changed his recommendation from underweight to neutral, saying that the Cerner acquisition and the business’ ongoing shift to the cloud are contributing factors.  

In a note to clients, Bracelin stated that the “[Fiscal First-Quarter] could represent a margin trough as Cerner cost savings start to materialize and Oracle refocuses on increasing operating efficiencies as the cloud company scales.”

According to the analyst, cloud adoption has been “better than feared” across the software-as-a-service and infrastructure-as-a-service categories, and there may be a route to improving the operating margin profile thanks in part to synergies from the Cerner acquisition.

Oracle stock increased a little to $66.70 in premarket trade.

According to Bracelin, Oracle’s (NYSE:ORCL) debt has increased to more than $990 billion, which has affected the size and scope of share repurchases and may put more strain on the company’s finances as a result of rising interest rates. However, it shouldn’t be a long-term problem if the company can continue to generate cash flows.

Oracle Stock Analyzed

In the analyst’s words, “if operating cash flows can surpass $15 billion yearly, there should be considerable flexibility to reduce debt and restart buy-backs over time.”

Thursday’s analyst day for Oracle (NYSE:ORCL) may provide additional details about the business’s financials. Bracelin noted, “While foreign exchange has proven to be a challenge, it’s probable the company’s management team will provide additional detail regarding its cloud business and margin possibilities.

Oracle (NYSE:ORCL) and Nvidia (NASDAQ:NVDA) said on Tuesday that they were expanding their current collaboration in an effort to accelerate the use of artificial intelligence in businesses. Oracle is generally viewed with caution by analysts (ORCL). Wall Street analysts have given Oracle stock a HOLD rating, while authors of Seeking Alpha have given it a HOLD. A HOLD rating for Oracle stock is also given by Seeking Alpha’s quant system, which routinely outperforms the market.

Oracle Stock Went Up After It Teamed Up With Nvidia To Make It Easier For Businesses To Use AI

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