There may be a buying opportunity in shares if earnings rise, Morgan Stanley said Wednesday.
Oracle shares jumped 2.7 percent Wednesday, hovering near $48 a share, down from September's 52-week high of $53.14 per share. Morgan Stanley raised its price target to $57 a share.
Oracle has gone through a necessary reset toward more achievable cloud growth expectations, after "over-exuberance" from executives , and , analyst Keith Weiss wrote in a research note.
Shares fell hard over the past few quarters after investors let go of the idea that Oracle's cloud will become the "next Microsoft."
But Weiss said those investors may have been ignoring some potential upside.
Some of Oracle's businesses are still strong, like databases, licensing and on-premise data storage, Weiss wrote. Plus, Oracle's earnings could benefit from the tax overhaul. In addition to lower tax rates, Oracle could bring back cash from overseas and put it toward stock buybacks, dividends or acquisitions, according to Weiss.
"We see the combination of continued stable fundamental performance, a lower tax rate and an increasing volume of share repurchases pushing to total return for ORCL into the low-teens over the next two years," Weiss wrote.
The bullish note comes a day after a report from The Information said that big cloud software companies like Amazon and Salesforce were looking at alternatives to some of Oracle's database technologies.