Piper Sandler Defends Oracle Ahead of Earnings, Sees $2.2B OCI Revenue Upside

Piper Sandler defended its Overweight rating on Oracle (ORCL) in a note to clients on Monday, arguing the company could generate approximately $2.2 billion in Oracle Cloud Infrastructure revenue not currently captured in consensus estimates, based on the firm’s analysis of capital expenditure to data center capacity to revenue conversion.

Rating Change

• Current Rating: Overweight
• Previous Rating: Overweight (unchanged)
• Price Target: Not disclosed

Analyst Rationale

The analyst believes the market has not fully priced in Oracle's capex-to-OCI revenue conversion model. Their analysis suggests an additional $2.2 billion in OCI revenue potential, which could boost Oracle's financial results in upcoming quarters.

Context

The defense comes ahead of Oracle's quarterly earnings release, as investors look for signs of cloud business growth. No other analysts have issued similar comments yet. ORCL stock is trading near its 52-week high.

What to Make of It

While Piper Sandler presents a bullish view backed by internal analysis, investors should monitor the upcoming earnings to see if this revenue upside materializes in actual results.