Oracle's Stock Climbs After Analyst Upgrade On Cloud Optimism

Shares of Oracle Corp. were indicated up nearly 1% in premarket trade Wednesday, after the software giant was upgraded at KeyBanc Capital, which cited increasing confidence in the company's cloud offerings. Analyst Monika Garg raised her rating to overweight, after being at sector weight since October 2015. She kept her stock price target at $61, which implies a 24% gain from Monday's closing price of $49.36. Garg said there were four main reasons for the upgrade: 1) Oracle's cloud business could double to a $12 billion business within two years; 2) the conversion of Oracle's existing customers to the cloud is still in its early stages; 3) the growth of artificial intelligence will help fortify Oracle's power of incumbency; and 4) margins could start expanding after years of cloud investment. "We have increasing confidence in the multiyear potential within cloud where optimism is warranted, in our view," Garg wrote in a note to clients. The stock has soared 28% year to date through Monday, while the SPDR Technology Select Sector ETF has climbed 12% and the S&P 500 has gained 8.5%.