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Investing.com - Goldman Sachs has reiterated its Buy rating and EUR310.00 price target on SAP (SAP:GR) (NYSE:SAP), currently trading at $263.82, ahead of the company’s third-quarter 2025 earnings report scheduled for October 22. According to InvestingPro data, analysts’ highest price target stands at $378, suggesting significant upside potential for this $307 billion market cap software giant.
The firm expects S/4 HANA product cycle momentum to remain robust, though it maintains prudent near-term forecasts due to uncertain macroeconomic conditions that are causing elongated sales cycles. The company’s strong financial position is reflected in its impressive 73.8% gross profit margin and 10.28% revenue growth over the last twelve months.
Goldman Sachs notes pipeline conversions have remained broadly unchanged throughout the third quarter, with full-year 2025 cloud backlog expected to be back-end loaded in the fourth quarter, reflecting typical seasonality patterns.
The firm emphasizes SAP is still in the early stages of its migration cycle with significant growth potential over the medium term, with customers likely to continue prioritizing upgrades to S/4 HANA given the 2027/2030 migration deadlines.
Goldman Sachs believes SAP offers more durable backlog and cloud revenue growth over the mid-term compared to broader software peers, with additional upside potential from artificial intelligence opportunities.
In other recent news, SAP SE has announced a partnership with OpenAI to launch a sovereign AI service for Germany’s public sector. This collaboration, named "OpenAI for Germany," will leverage SAP’s enterprise applications expertise alongside OpenAI’s AI technology, with a planned launch in 2026. Furthermore, SAP has entered into an agreement to acquire SmartRecruiters, a talent acquisition software provider, to enhance its SuccessFactors human capital management suite. The acquisition aims to integrate SmartRecruiters’ recruiting capabilities into SAP’s existing HR platform, with the transaction expected to close in the fourth quarter of 2025.
Analyst firms have also made adjustments to their price targets for SAP. Deutsche Bank lowered its price target to €270 from €300, maintaining a Buy rating, while citing a recent derating across software peers. Similarly, BofA Securities adjusted its price target to EUR316 from EUR320, also maintaining a Buy rating, due to foreign exchange impacts expected to affect future revenue. These recent developments reflect SAP’s strategic moves and the analyst community’s response to market conditions.
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