Oracle (ORCL) Initiated at Sell by Rothschild Redburn, $175 Price Target Set

Oracle Corporation (NYSE:ORCL) is one of the Buzzing AI Stocks on Wall Street. On September 25, Rothschild & Co Redburn initiated the stock at “Sell” stating that it sees too many negative catalysts for Oracle. The firm holds a $175 price target on the stock.

According to the firm, the market is materially overestimating the value of Oracle’s contracted cloud revenues. In big, single-tenant, large-scale deployments, the company acts more like a financier than a cloud provider, “with economics far removed from the model investors prize.”

Oracle’s five-year cloud revenue guidance is equal to $60B in value. This reflects that the market is already pricing in a “risky blue-sky scenario that is unlikely to materialize.”

“While the market currently fixates on headline figures, we expect attention to shift toward the underlying economics. Combined with subdued non-IaaS [infrastructure as a service] growth— which the market appears willing to overlook for now—this sets up meaningful downside risk. Consequently, we launch coverage with a Sell rating and a $175 target price.”

Oracle Corporation (NYSE:ORCL) is a database management and cloud service provider.

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