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Investing.com - JMP Securities raised its price target on SAP AG (NYSE:SAP), a $343.7 billion software giant, to $375.00 from $330.00 while maintaining a Market Outperform rating following the company’s second-quarter 2025 results. According to InvestingPro data, four analysts have recently revised their earnings estimates upward for the upcoming period.
SAP reported mixed results for the quarter, with non-IFRS earnings per share of €1.50, exceeding the consensus estimate of €1.45, and operating profit of €2.57 billion, above the consensus of €2.42 billion.
Total (EPA:TTEF) revenue reached €9.03 billion, slightly below the consensus of €9.08 billion, but still representing a 12% year-over-year increase in constant currency, up from 11% growth in the previous quarter.
Cloud revenue, a key growth metric for the company, came in at €5.13 billion, just short of the €5.15 billion consensus, yet showed 28% growth in constant currency, improving from 26% in the previous quarter. Cloud ERP growth accelerated to 34% in constant currency compared to 33% in the prior quarter.
The company’s current cloud backlog growth slowed slightly to 28% in constant currency, down from 29% in the previous quarter, contributing to a 2% decline in SAP’s stock price in aftermarket trading despite the shares having risen 24% year-to-date, outperforming both the Russell 3000 and S&P 500 indices, which each gained 7%.
In other recent news, SAP has been the focus of several analyst reports and company statements. Piper Sandler has adjusted its price target for SAP, initially raising it to €355 due to strong demand for enterprise resource planning (ERP) solutions, with a notable increase in expected spending by customers. However, they later lowered this target to €345, citing prolonged sales cycles in the U.S. public sector and manufacturing sectors, attributed to trade uncertainties. Despite these adjustments, Piper Sandler maintains an Overweight rating on SAP, reflecting confidence in the company’s market position.
In addition, SAP’s CEO, Christian Klein, has expressed skepticism regarding the need for more data centers in Europe to support artificial intelligence, challenging recent comments by Nvidia (NASDAQ:NVDA)’s CEO. Klein questioned the necessity of building additional infrastructure, which suggests a strategic focus on optimizing existing resources. Furthermore, Piper Sandler initiated coverage of SAP with an Overweight rating, noting the company’s rapid growth in the cloud sector, specifically its Cloud ERP business, which has achieved a €17 billion run-rate with 34% year-over-year growth. These developments highlight SAP’s dynamic position in the software industry and ongoing discussions about its strategic direction.
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