Citizens Stays Constructive on Oracle (ORCL) Amid Investor Confusion on OCI

Oracle Corporation (NYSE:ORCL) is one of the AI Stocks Making Waves on Wall Street. On December 17, Citizens maintained its “Market Outperform” rating on the stock with a $342.00 price target. The firm remains confident in Oracle’s cloud business model, contract economics, and funding structure, despite ongoing debt-related concerns.

Citizens highlighted the increasing cost of insuring Oracle debt and some general investor confusion surrounding its OCI business model. Even though the media has focused on these debt signals as a measure of business risk, the firm believes that the reality is far more complex.

Citizens believes that the long-term contracts of Oracle are highly valuable and that the company is still able to finance projects efficiently.

“We believe the NPV of Oracle’s take-or-pay contracts remains very positive (assuming they are like CRWV), and that the ability to match project finance debt against underlying contract duration at 80% loan to cost remains robust at a cost of capital well below the development yield.”

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

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Disclosure: None.