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On Thursday, TD Cowen’s analysts expressed a positive outlook on SAP AG (NYSE: NYSE:SAP) shares, increasing the price target from $320.00 to $350.00 while reaffirming a Buy rating. Currently trading near $299, SAP has shown impressive momentum with a 55% return over the past year. According to InvestingPro data, the stock is trading at premium valuations, with a P/E ratio of 54x. The adjustment follows observations made at SAP’s Sapphire ’25 conference and Analyst Day held in Orlando.
Analysts highlighted their optimism based on the management’s confidence in the company’s growth and margin acceleration strategy. With a robust gross profit margin of 74% and revenue growth of 10.5% in the last twelve months, SAP demonstrates strong operational execution. This includes the ongoing shift to cloud-based services, potential for significant revenue increase from the current on-premises customer base, and the development of new artificial intelligence initiatives with Joule and BDC.
SAP’s commitment to its cloud migration path was particularly noted, with the expectation of sustained growth. The company’s efforts to enhance product cross-selling and its early steps into AI with Joule and BDC were also seen as positive indicators. The analysts believe that SAP’s go-to-market transformation is poised to support these objectives and improve operational efficiencies.
The raised price target to $350.00, which corresponds to €310.00, is based on an approximate 35 times enterprise value to the forecasted CY26E free cash flow. This valuation reflects the analysts’ confidence in SAP’s financial prospects and strategic initiatives aimed at driving long-term growth.
In other recent news, SAP SE (ETR:SAPG) has reported its first-quarter financial results to Deutsche Boerse (ETR:DB1Gn) AG, providing insights into its financial performance. The company disclosed both IFRS and non-IFRS measures, emphasizing the supplementary nature of the latter to offer a broader understanding of its financial health. Additionally, SAP announced significant advancements in Business AI at its annual SAP Sapphire conference, aiming to enhance business productivity by up to 30%. This includes the expansion of its AI assistant Joule and partnerships with companies like Perplexity and Palantir (NASDAQ:PLTR), which are expected to support cloud migration and modernization efforts.
In terms of analyst coverage, Wells Fargo (NYSE:WFC) initiated an Overweight rating for SAP with a price target of EUR345.00, citing the company’s cloud conversion momentum as a key growth driver. Similarly, KeyBanc maintained its Overweight rating with a €290.00 target, highlighting SAP’s strategic partnerships and transformation strategy. These developments reflect SAP’s ongoing focus on cloud migration and AI integration, which are anticipated to drive future growth. The company’s strategic initiatives and analyst ratings suggest confidence in SAP’s ability to navigate current market conditions and expand its market position.
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