JMP maintains SAP stock $330 target on growth prospects

On Wednesday, JMP Securities analyst Patrick Walravens maintained a Market Outperform rating on SAP AG (NYSE:SAP) with a steady price target of $330.00. With SAP’s market capitalization now reaching $340 billion, InvestingPro analysis indicates the stock is trading above its Fair Value. Walravens highlighted the effectiveness of SAP’s growth strategy, citing the RISE program’s success in transitioning the company’s €11 billion support revenue to cloud-based solutions at a multiple of 2 to 3 times the original value. Additionally, the GROW initiative aims to tap into new market opportunities by simplifying the adoption of S/4HANA Public Cloud for small and medium-sized enterprises (SMEs) or individual business units within larger corporations.

Walravens underscored SAP’s potential for long-term capital appreciation, pointing to the substantial total addressable market (TAM) that is projected to reach $670 billion by 2025. The company’s strong position is reflected in its impressive 73.19% gross profit margin and 9.51% revenue growth over the last twelve months. This expansive market presents a significant opportunity for SAP to further penetrate and capture a larger market share.

The progress in SAP’s Business Artificial Intelligence (AI) was also noted as a positive development. According to Walravens, half of SAP’s cloud order entries now include AI components, demonstrating the company’s commitment to integrating advanced technologies into its offerings. This technological advancement has contributed to SAP’s strong performance, with the stock delivering an 18.87% return year-to-date. SAP CEO Christian Klein’s favorable response to the DeepSeek-R1 model was mentioned as an indicator of the company’s forward momentum in AI development.

The analyst’s reiteration of the $330.00 price target reflects confidence in SAP’s strategic direction and its ability to capitalize on the growing demand for cloud and AI solutions in the enterprise software market. The target suggests a potential upside from the company’s current market valuation, signaling JMP Securities’ optimistic outlook on SAP’s financial performance and stock potential. For a deeper understanding of SAP’s valuation and growth prospects, InvestingPro subscribers can access 18 additional ProTips and a comprehensive Pro Research Report.

In other recent news, SAP SE (ETR:SAPG) has been the subject of multiple analyst upgrades. Stifel raised the company’s stock price target from EUR265 to EUR300, citing confidence in SAP’s ability to transition large legacy ERP customers to its RISE with SAP offering. Similarly, Bernstein analysts increased SAP’s target price from $267 to $376 following the company’s robust performance in Q4. JMP Securities also revised SAP’s price target, raising it from $300 to $330, attributing this adjustment to SAP’s effective growth strategy and promising total addressable market. TD Cowen analysts increased SAP’s price target to $310 from $305, following the company’s strong Q4 performance, especially in the Cloud & Software (ETR:SOWGn) segment.

In addition to these upgrades, SAP SE recently released its Q4 earnings, providing insights into the company’s performance using non-International Financial Reporting Standards (non-IFRS) measures. The company emphasized that these non-IFRS financial metrics should be viewed as supplementary to standard IFRS measures such as revenue, operating income, and cash flows.

These are recent developments, and the market awaits to see how SAP’s shares will respond to these revised outlooks from various analyst firms. As always, investors are advised to conduct their own research and consult with a financial advisor before making investment decisions.

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