Oracle Downgraded to Hold with $160 Target on Cash Flow Concerns
Melius analyst Ben Reitzes downgraded Oracle from Buy to Hold on February 9, maintaining a $160 price target and citing weak free cash flow and high debt possibly requiring equity raises. Unrelated news of Alphabet’s $20 billion bond sale for AI spending offers minimal direct impact on Oracle’s valuation.
1. Downgrade to Hold
On February 9, Melius analyst Ben Reitzes downgraded Oracle from Buy to Hold, while keeping the price target at $160 per share.
2. Cash Flow and Debt Concerns
Reitzes flagged Oracle’s weak free cash flow generation and noted that high debt levels could necessitate equity raises, weighing on valuation for the foreseeable future.
3. Valuation as Infrastructure
The firm suggested valuing Oracle more like an infrastructure company rather than a software provider due to its capital intensity and cash flow profile.