A Wall Street analyst says Oracle's business will take a hit from the cloud trend 'even in optimistic scenarios'
- A Wall Street analyst downgraded Oracle to sell from hold, saying the tech giant will likely take a hit from the ongoing shift to the cloud until 2023.
- CFRA analyst John Freeman also pulled his Oracle price target to $50 from $56.
- "Even in optimistic scenarios for Oracle, the ongoing shift to cloud computing is increasingly deflationary for revenue and margins until at least fiscal 2023," Freeman said.
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The cloud will be bad news for Oracle over the next three years, a Wall Street analyst said Wednesday.
A CFRA analyst downgraded Oracle to sell from hold on Wednesday, saying the tech giant will likely take a hit from the ongoing shift to cloud computing at least until 2023.
Analyst John Freeman of CFRA also pulled his price target to $50 from $56, telling clients that the ongoing cloud migration, which is seen picking up in the coming years, is bound to hurt Oracle's revenue and profit margins.
"Even in optimistic scenarios for Oracle, the ongoing shift to cloud computing is increasingly deflationary for revenue and margins until at least fiscal 2023," Freeman told clients in a note.
The cloud lets businesses to set up their networks on web-based platforms such as those run by Amazon, Microsoft and Google, allowing them to scale back or even abandon private data centers.
This has been bad news for traditional enterprise tech companies, such as Oracle and IBM, which sell software and hardware used to run in-house data centers.
These tech giants are scrambling to catch up to the dominant players in the cloud. Oracle is expanding its own cloud infrastructure to challenge Amazon, but a recent Forester report argued that Oracle and IBM have simply fallen so far behind the leaders.
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