Oracle financing plan removes key overhang, BMO says

Investing.com -- BMO Capital analyst Keith Bachman believes Oracle’s sweeping new financing plan marks a constructive step for the software group, even as the firm cut its price target to $205 from $270 and lowered earnings estimates.

Bachman said BMO is revising its forecast after Oracle moved to raise $45 billion to $50 billion in a mix of debt, equity and convertible preferred equity.

He emphasised that demand for the debt portion was far stronger than expected, saying there was “meaningful demand for Oracle’s debt offering at ~$125 billion vs the $25 billion offering.”

According to BMO, that level of interest “supports the idea that investors are still willing to underwrite large-scale AI infrastructure plans.”

While acknowledging the dilutive impact of equity issuance, BMO said the market backdrop had shifted and that issuing equity “was likely necessary in order to raise debt capital and help stabilise the financing markets and supply chain.”

The firm said the size of the capital raise is key. Bachman wrote that it likely means not needing any more during CY26, adding that the move “alleviates the need for another capital raise during FY27.”

BMO believes that a reduction in financing uncertainty should help remove a major overhang for investors.

The firm cut EPS estimates due to a higher share count, increased interest expense and preferred dividends.

Still, BMO reiterated an Outperform rating, stating: “We view Oracle procuring financing, and likely not needing any more during CY26, as a positive step for the shares as it removes an overhang.”

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