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Investing.com - Barclays (LON:BARC) raised its price target on SAP AG (NYSE:SAP) to $322.00 from $308.00 on Friday, while maintaining an Overweight rating on the German software giant. According to InvestingPro data, SAP currently trades at $286.16, with analysts setting targets ranging from $286.31 to $378.00.
The firm noted that SAP delivered a solid revenue quarter with current cloud backlog (CCB) slightly decelerating to 28% as expected, while cloud revenue accelerated toward the upper end of the company’s fiscal year guidance range of 26-28%. The company’s overall revenue growth stands at 10.28% over the last twelve months, with a robust gross profit margin of 73.8%. InvestingPro analysis reveals 13+ additional key insights about SAP’s performance and valuation metrics.
Barclays acknowledged management’s comments about a strong pipeline for the second half of the year, but also highlighted potential risks from delays in decision-making in the U.S. public sector and manufacturing industry that could result in lower conversion ratios.
The research firm expects Q3 cloud revenues to remain at the upper end of the fiscal year guidance, helped by strong Q2 CCB, before decelerating toward the lower end in Q4, putting SAP on track to hit the mid-point of its full-year guidance.
Barclays continues to view SAP’s 11-13% cloud and software growth guidance as conservative, as it implies a steep 8-9% decline in license and support revenue for the fiscal year, which the firm believes is unlikely since maintenance now constitutes the majority of those revenues and is less sensitive to macroeconomic conditions.
In other recent news, SAP reported its second-quarter 2025 earnings, which analysts described as solid despite a revenue miss attributed to foreign exchange factors. Berenberg reiterated its Buy rating for SAP, maintaining a price target of EUR289.00, while KeyBanc also reaffirmed its Overweight rating with a slightly higher price target of EUR290.00. Bernstein increased its price target for SAP to $344.00 from $324.00, citing notable margin improvements that exceeded expectations. Oppenheimer maintained a Perform rating, noting that SAP’s results met market expectations and highlighted significant growth in transitioning its ERP installed base to the Cloud Suite.
The company has kept its full-year 2025 guidance unchanged, indicating confidence in its financial outlook. However, SAP’s CEO, Christian Klein, mentioned that some clients are hesitant to commit due to uncertainties surrounding tariffs imposed by President Trump. Despite these challenges, SAP’s cloud transition continues to progress smoothly, with growth rates in key areas surpassing expectations when adjusted for currency fluctuations. Cash flow and margin targets remain stable, even amidst cautious management commentary.
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