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On Wednesday, SAP AG (NYSE:SAP), a $320.79 billion software giant with a "GOOD" financial health rating according to InvestingPro, received a reaffirmed Market Outperform rating and a $330.00 price target from JMP. The endorsement followed SAP’s announcement of its first quarter results for 2025, which exceeded analysts’ expectations. SAP reported non-IFRS earnings per share (EPS) of €1.44, surpassing the consensus estimate of €1.32. The company’s operating profit reached €2.46 billion, also ahead of the anticipated €2.25 billion.
Total (EPA:TTEF) revenue for SAP came in at €9.01 billion, which, while slightly below the consensus estimate of €9.07 billion, still represented an 11% year-over-year increase when adjusted for constant currency. This growth rate marked an improvement from the 10% increase reported in the previous quarter. SAP’s cloud segment continued to expand, with a 26% increase in constant currency, albeit slightly down from the 27% growth seen in the prior quarter. InvestingPro analysis indicates the stock is currently trading above its Fair Value, with a P/E ratio of 89.65x reflecting investor optimism about the company’s growth prospects.
The current cloud backlog, an indicator of future revenue, showed a robust 29% growth in constant currency, maintaining the same pace as the previous quarter. Following the release of these strong financial figures, SAP’s stock experienced a 9% surge in aftermarket trading. This positive movement built on the stock’s year-to-date gain of 3%, a notable achievement considering the Russell 3000 and S&P 500 indices both saw declines of 10% over the same period.
JMP’s analysis underscored SAP’s performance, particularly highlighting the company’s ability to outperform market expectations and demonstrating strong growth in key areas such as cloud services. The reiteration of the $330 price target reflects JMP’s continued confidence in SAP’s market position and future prospects.
In other recent news, SAP has been the focus of several analyst adjustments and business developments. Citi analysts have reduced their price target for SAP to EUR280 from EUR300, maintaining a Buy rating. They anticipate that SAP’s revenues and margins will meet expectations, although backlog growth may slow due to macroeconomic uncertainties. Meanwhile, TD Cowen has raised SAP’s price target to $315, maintaining a Buy rating, and projects a 14% growth in Cloud & Software (ETR:SOWGn) for the first quarter, which would be a decade high. BMO Capital Markets also adjusted its price target for SAP to $300 from $307, while keeping an Outperform rating, citing the company’s strong revenue visibility from cloud conversions despite broader economic challenges.
Additionally, SAP is set to introduce an AI agent service in Japan, which will assist businesses with customer management tasks. This new service will be integrated into SAP’s existing enterprise resource planning system. The company’s ongoing efforts in AI and cloud services highlight its strategic focus on technological advancement. These developments come as SAP prepares for its first-quarter earnings report, with analysts closely watching its performance amid mixed economic signals.
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