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 flexibili...
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