Oracle has collected 25% this year. Why an analyst has become neutral on the stock.
the actions were on a roll. Shares of the enterprise software company are up 25% year-to-date and recently set an all-time high of just over $ 80 per share.
Barclays analyst Raimo Lenschow believes investors should take profits. It downgraded its rating on Oracle stock (ticker: ORCL) to Equal Weight, from Overweight, while keeping its price target of $ 80.
Lenschow raised its stock rating two months ago, ahead of earnings. He cited two reasons for the upgrade: accelerating income growth due to a shifting mix and a style rotation towards more valued stocks as the rally widens.
“So far the second catalyst has played and Oracle has been a relatively successful year so far,” he writes. “However, to see further relative outperformance, an acceleration in Oracle’s growth is needed, and we don’t yet have enough tangible data points for that.”
Lenschow notes that the action was prompted by a shift in market focus from a narrow group of high-growth stocks “to a larger recovery portfolio,” including Oracle. He says style rotation may continue, but Oracle’s valuation has risen and may see less on the upside from that source.
“The most important driver of the future increase will be an acceleration in revenue growth at Oracle that would allow a further positive reassessment,” he writes. “So far, there are only the first signs of an improvement in the mix effect, such as a significant increase in the capitalization of the ex cloud which could lead to better growth in the future. However, looking at recent quarters and advice, there isn’t enough evidence here to get too excited yet. “
Oracle shares slipped 0.6% on Monday to $ 79.93.
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