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Investing.com - Piper Sandler has raised its price target on SAP (SAP:GR) (NYSE:SAP) to EUR355.00 from EUR350.00 while maintaining an Overweight rating on the stock. The company’s stock is trading near its 52-week high of $312.26, reflecting strong momentum that has delivered a 55% return over the past year. InvestingPro data shows three analysts have recently revised their earnings estimates upward for the upcoming period.
The adjustment comes after the firm’s survey showed strengthening enterprise resource planning (ERP) momentum, with 68% of respondents expecting to increase their SAP spending in 2025 compared to 2024, up from 50% in the previous survey. This aligns with SAP’s robust revenue growth of 10.51% and impressive gross margin of 73.63%. For deeper insights into SAP’s financial health and growth metrics, consider exploring the comprehensive analysis available on InvestingPro.
Piper Sandler described SAP as "one of the few high-conviction application growth stocks to own with company-specific levers," highlighting the company’s positioning to benefit from increased customer spending.
The new price target is based on a slightly higher free cash flow margin assumption of 27.7%, up from the previous 27.5%, reflecting growing cloud ERP momentum.
The valuation model uses a 34x multiple on calendar year 2030 estimated EV/FCF, discounted three years by 14%, according to the research note.
In other recent news, SAP has been a focal point for analysts, with several firms updating their outlooks on the company. Piper Sandler initiated coverage on SAP with an overweight rating, highlighting the company’s fast-growing Cloud ERP business, which has reached a €17 billion run-rate with 34% year-over-year growth. The firm expects cloud services to exceed 50% of SAP’s total revenue mix this year. UBS analyst Michael Briest raised SAP’s price target to €307.00, maintaining a Buy rating after the SAPPHIRE event, emphasizing SAP’s focus on AI and data cloud initiatives. Meanwhile, JMP Securities maintained a Market Outperform rating on SAP, with a price target of $330.00, noting the company’s significant core market opportunity and robust backlog growth. The analyst highlighted SAP’s trading multiples and potential upside, suggesting a possible price increase if certain financial metrics are achieved by 2026. SAP CEO Christian Klein recently challenged the need for more data centers in Europe, advocating for practical AI applications instead. These developments underscore the strategic moves SAP is making to strengthen its market position and drive growth.
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