This major stocks offers "one of the most attractive risk/reward profiles": Mizuho

Investing.com -- Mizuho reiterated an Outperform rating on a major software name with a price target of $320 in a note Tuesday, arguing that shares trading at multi-year lows represent "one of the most attractive risk/reward profiles" in its coverage.

Analyst Siti Panigrahi said Oracle (NYSE: ORCL) shares trade at 14x calendar year 2027 non-GAAP EPS, a discount to every comparable infrastructure peer despite above-peer growth, even as execution strengthens across capacity conversion, RPO quality and financing visibility.

He noted that management delivered two consecutive strong quarters while providing increasing clarity on funding, with approximately 1GW of capacity coming online in the first quarter of fiscal 2027, nearly equivalent to all of fiscal 2026's roughly 1.2GW.

On financing, Mizuho explained that Oracle has maintained its investment-grade rating despite a recent S&P downgrade to BBB-, with fiscal 2027 fundraising plans including $40 billion in equity ATM capacity.

The firm believes "the Street is giving very little credit to ORCL for success on BYOC/pre-paid contracts, reducing the balance sheet burden."

Panigrahi projects free cash flow flipping positive to $8 billion and $41 billion in fiscal 2029 and 2030, respectively, as fiscal 2027 and 2028 mark peak capex years. He also highlighted Applications, led by Cerner, as "an underappreciated leg of the thesis," with deferred revenue growing 16% in the fourth quarter versus 10% in-quarter SaaS growth.

Mizuho added that Oracle's current valuation of approximately 15x NTM EPS is significantly below its five-year and three-year averages of 21x and 25x, respectively, positioning shares for a durable re-rate higher.

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