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On Wednesday, Bernstein analysts provided an optimistic outlook on SAP AG (NYSE: NYSE:SAP) shares, raising the price target significantly from $267.00 to $376.00 while maintaining an Outperform rating. The adjustment follows SAP’s robust performance in the fourth quarter and its guidance, which surpassed expectations in several key areas. The stock has demonstrated remarkable momentum, with a 56.67% return over the past year and currently trades near its 52-week high of $277.36.
The company’s strong Q4 results were highlighted as evidence of SAP’s solid business and execution capabilities. With an 8% revenue growth and a robust 72.9% gross profit margin, SAP has demonstrated strong operational efficiency. Bernstein’s analysts expressed confidence in SAP’s prospects for the fiscal year 2025 and beyond, describing the company as a "quality compounder" with a promising setup for continued success. InvestingPro data shows the company maintains a "GOOD" financial health score, supporting this positive outlook.
In their commentary, the analysts justified the increased price target by pointing to an upward adjustment in SAP’s growth trajectory and a general rise in the valuation of its peer group. As a result, Bernstein raised its target valuation multiple for SAP from 33.5x to 39x. This new valuation also led to a raised price target for SAP’s shares traded on the German exchange, from €247 to €303.
The upbeat assessment was further supported by revisions to revenue and margin forecasts, indicating stronger financial performance ahead for SAP. The analysts’ comments underscored the company’s ability to exceed market expectations and its potential for sustained growth in the technology sector.
SAP’s positive guidance and the subsequent analyst upgrade are likely to be well-received by investors and could influence the company’s stock performance in the near term. As of now, the market awaits to see how SAP’s shares will respond to this revised outlook from Bernstein.
In other recent news, SAP SE (ETR:SAPG) reported Q4 earnings, highlighting the use of non-IFRS measures in its financial results. The software giant saw an 11% sales growth, largely due to a robust 27% increase in cloud growth. The company’s cloud backlog also experienced a significant 32% growth, indicating potential future revenues. Analysts from JMP Securities, TD Cowen, BMO Capital Markets, and CFRA have adjusted their price targets for SAP following these results. While JMP Securities raised SAP’s price target to $330, maintaining a Market Outperform rating, TD Cowen and BMO Capital Markets increased their price targets to $310 and $307 respectively, both maintaining positive ratings. However, CFRA adjusted its stance on SAP from Buy to Hold, citing valuation concerns. As part of its " Next (LON:NXT) Level Transformation" program, SAP is also undergoing a major workforce reduction, with approximately 3,500 of its 25,000 employees in Germany set to depart the company. These are among the recent developments shaping SAP’s financial landscape.
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