Why Oracle Stock Bumped Higher on Wednesday
Key Points
A pundit changed his recommendation for the better.
He now feels the company is a fine "buy on weakness" opportunity.
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It wasn't a huge price surge, but investors will take it. On Wednesday, Oracle's (NYSE: O) stock got a little bit of a bounce, rising in excess of 1% thanks in no small part to an analyst's recommendation upgrade. That rise, modest as it was, beat the 0.8% increase of the bellwether S&P 500 index.
Oppy says buy
The person behind the move was Oppenheimer prognosticator Brian Schwartz. Well before Wednesday's market open, he lifted Oracle stock one notch to outperform (i.e., buy) from his preceding evaluation of perform (hold). His price target on the storied tech company is now $185 per share.
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According to reports, Schwartz's change is due to several factors. He cited the general decline of the share price -- by roughly 25% this year -- as a development tipping the stock into buy territory. Although he acknowledged Oracle's higher spending on areas such as artificial intelligence (AI) and cloud infrastructure, he still feels it can double its per-share net income by the company's fiscal 2030.
The analyst also pointed to several high-profile customer "gets", including top AI developer OpenAI.
Downward trend
Schwartz also pointed out that, to a degree, Oracle has been a victim of the investor sell-off in tech companies that are seen as beholden to old, software-centric business models. I've never considered company management to be particularly backward-looking or stuck on traditional ways of doing things; rather, I feel it's embraced the latest advances that can help its business. Like the Oppenheimer pundit, I'm bullish on Oracle's future too.
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Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Realty Income. The Motley Fool has a disclosure policy.
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