Oracle Corporation

Investment Thesis

We suggest adopting a long position on this stock, positioning it as an appealing option for purchase due to its consistent and expanding dividend, steady growth in revenue, and the anticipated substantial growth in the cloud infrastructure sector. There are several positive aspects within the business and financial realms that we expect to yield favorable results, aspects that the investor community currently undervalues. Oracle's Cloud Infrastructure (OCI) is predicted to outperform its competitors due to its superior performance and more affordable pricing. The company is also actively reinvesting significant capital into its operations, as evidenced by its noteworthy capital expenditures and escalating research and development costs. This could effectively support its strategic acquisition approach and product range expansion. Our projected price target, based on the DCF model's base case, stands at $131.43. Furthermore, additional potential for growth is indicated by a comparable company analysis, which demonstrates that the company is currently underestimated by investors relative to its peers, particularly when considering EV/EBITDA and P/E ratios.

Business Analysis

Oracle provides products and services that address enterprise information technology (IT) environments. Oracle's operations are categorized into four distinct business segments: Cloud services and license assistance, Cloud License and on-premise license, Hardware, and Services.

Oracle's range of cloud services covers a diverse spectrum of offerings, encompassing Oracle Software-as-a-Service and Oracle Cloud Infrastructure, all delivered through a cloud-centric framework. Users can conveniently access these services via their preferred web browser. These Oracle cloud services have been strategically designed to expedite their implementation, leading to quicker innovation timelines. These services feature a user-friendly interface, catering to both novice and experienced users, and are engineered for simplified maintenance, reducing the effort needed for upgrades, integration, and testing. Furthermore, these services seamlessly integrate across different deployment models, enhancing flexibility among diverse IT environments. They ensure smooth compatibility, facilitating the transition of workloads between the Oracle Cloud and other IT configurations. In addition, these services are cost-efficient, requiring lower initial investments from customers. Primarily, they prioritize stringent security measures, adhere to established standards, and provide unwavering reliability.