On Wednesday, Jefferies raised its price target on shares of SAP SE (ETR:SAPG) (SAP:GR) (NYSE: SAP) to €210 from €210, maintaining a "Buy" rating on the stock. The firm's decision is anchored in the belief that SAP's product cycle is more significant than macroeconomic factors affecting the sector.
The analyst from Jefferies noted SAP's distinctive position in a sector with varied trading signals, emphasizing the company's product offerings. With recent statements from management indicating an improving sales pipeline, there is a strong expectation that the second-quarter results will provide confirmation of SAP's successful cloud migration and a positive outlook on overall growth.
Jefferies' confidence in SAP is further bolstered by the company's strategic focus on cloud technology. The firm's new price target reflects an optimistic stance on SAP's ability to navigate through the current economic landscape, driven by its innovative solutions and strong market presence.
The price target increase comes as SAP prepares to release its second-quarter financial results. Investors and stakeholders are likely to watch closely for evidence of progress in the company's cloud initiatives and growth metrics that align with Jefferies' positive projections.
The endorsement from Jefferies suggests that SAP is well-positioned to continue its momentum in the evolving software industry. The maintained "Buy" rating and elevated price target underscore the firm's belief in SAP's capacity to outperform within its sector.
In other recent news, SAP SE reported a significant surge in its cloud revenue and backlog in the first quarter of 2024, with cloud revenue climbing by 25% to €3.9 billion and current cloud backlog expanding by 28% to a record €14.2 billion. Operating profit rose by 19% to €1.5 billion, indicating strong performance across various regions. Analysts from HSBC (LON:HSBA) reaffirmed a Buy rating on SAP's stock, increasing the price target to €200 from €180, reflecting a positive view of the company's first-quarter performance.
Analysts from BMO Capital Markets Corp., Stifel, and J.P. Morgan also provided their assessments, with ratings ranging from "Market Perform" to "Overweight". Despite facing a competitive environment and macroeconomic headwinds, SAP's cloud transition and AI-driven growth strategy appear to be delivering robust results.
The company's revenue is expected to rise from €29,739 million in 2022 to €37,633 million in 2025, with EPS estimated to increase from €4.24 in 2024 to €5.69 in 2025. SAP's cloud revenue is projected to burgeon at a 25% year-over-year clip in 2024 and 2025, supported by a robust cloud backlog. These are among the recent developments for SAP.
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