Oracle Just Hit a New 52-Week Low. Wall Street's Average Target Is Still More Than Double the Stock.
The market and the covering analysts are more than $130 apart on this stock.
Overview
Six weeks ago, Oracle (NYSE: ORCL) management guided for about $8.05 in non-GAAP (adjusted) earnings per share this fiscal year. As of this writing, the stock trades around $117 -- less than 15 times that figure, after setting a new 52-week low of $114.75 on Friday. A multiple like that is usually reserved for mature software companies whose growth is ending, not for a business that just guided for revenue growth of about 34%.
However, the analysts covering the software and cloud computing giant haven't followed the stock's price all the way down. The average price target on Oracle sits at about $248, more than double the current share price of about $117.
Details
To be clear, an average price target isn't an investment case, and I wouldn't buy any stock because of one. But a gap this wide is worth understanding. Each side of it is pricing a different answer to the same question: Will Oracle's enormous backlog of AI (artificial intelligence) contracts convert into cash before the cost of building for it damages the company?
Source
Originally published at www.fool.com.