On Monday, Stifel analysts demonstrated confidence in SAP SE (ETR:SAPG) (SAP:GR) (NYSE: SAP) by increasing the company’s price target from EUR265.00 to EUR300.00. The firm maintained its Buy rating on the stock. With a current market capitalization of $325 billion, InvestingPro analysis indicates the stock is trading above its Fair Value. This adjustment comes as SAP shares have experienced a notable re-rating over the past several months, escalating from approximately 6.0–6.5 times the next 12-month sales in the summer of 2024 to around 8.5 times currently, with the stock now trading near its 52-week high.
The upgrade in the price target is attributed to growing confidence in SAP’s ability to transition large legacy ERP customers to its RISE with SAP offering, which is expected to sustain momentum in cloud revenues. Supporting this outlook, InvestingPro data shows the company has achieved impressive returns, with a 55.43% gain over the past year and a strong gross profit margin of 73.19%. Stifel analysts project that SAP’s stock performance will increasingly be driven by EPS growth and positive earnings revisions in the coming years, with two analysts already revising their earnings estimates upward for the upcoming period.
Stifel’s analysis suggests that SAP’s top-line growth could accelerate further, from 11% in FY24 to an estimated 14% in FY27, bolstered by a consistent approximately 25% increase in cloud revenues and a strong maintenance business. The company’s Cloud Current Backlog (CCB) growth of 29% and Total (EPA:TTEF) Contract Value (TCB) growth of 40% at the end of 2024 reinforce the analysts’ confidence in SAP’s medium-term prospects. Recent financial data from InvestingPro shows SAP maintaining solid momentum with 9.51% revenue growth in the last twelve months. For deeper insights into SAP’s growth trajectory and 17 additional ProTips, subscribers can access the comprehensive Pro Research Report available on the platform.
The report also highlights potential factors that could provide upside risks to consensus estimates, including faster than anticipated cloud migrations, a potential macroeconomic recovery that could benefit transactional businesses, and increased cross-selling opportunities.
In other recent news, SAP AG (NYSE:SAP) has been the subject of several analyst upgrades following strong Q4 results. Bernstein analysts raised the price target for SAP from $267 to $376, maintaining an Outperform rating due to the company’s robust performance and promising setup for continued success. JMP Securities also revised its financial outlook for SAP, raising the software giant’s price target from $300 to $330, citing SAP’s effective growth strategy and potential for long-term capital appreciation.
TD Cowen analysts increased the price target on SAP shares to $310 from $305, while reaffirming a Buy rating, following SAP’s solid fourth-quarter performance. BMO Capital Markets updated their financial outlook for SAP, increasing the price target on the company’s shares to $307 from the previous $265, maintaining an Outperform rating.
SAP recently reported its Q4 financial results, emphasizing non-IFRS measures and demonstrating a commitment to transparency. These recent developments underline the company’s ability to exceed market expectations and its potential for sustained growth in the technology sector. The analysts’ upgrades and SAP’s Q4 results reflect a positive outlook on the company’s growth trajectory, particularly in the cloud sector, and are likely to influence the company’s stock performance in the near term.
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