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Investing.com -- Barclays raised its price target on SAP to €300 from €275 in a note on Wednesday, citing accelerating cloud adoption, growing artificial intelligence demand, and the company’s Business Data Cloud (BDC) offering as key drivers.
The bank reiterated its Overweight rating on the stock.
“Our assessment of SAP’s AI and BDC offering, combined with our updated cloud transition model, suggests a ~13% revenue CAGR to FY30,” Barclays analysts wrote.
The bank added that it is “10% ahead on EPS,” forecasting €14.3 in earnings per share by 2030.
Barclays said BDC marks “a substantial evolution of the company’s previous data and analytics offering, allowing customers to seamlessly unify data and provides a solid foundation to deploy AI, which in itself should drive strong growth for SAP.”
The bank estimates that AI and BDC could contribute about €3.5 billion cumulatively to revenue by fiscal 2030, leaving Barclays roughly 6% ahead of Bloomberg consensus.
On profitability, Barclays expects significant operating leverage. “We see substantial margin upside potential for SAP, and our assessment of peer margins and AI-related cost savings gives us confidence that cost can grow at ~85% of revenues until FY30E, supporting more than a 100bp margin improvement p.a. on average,” the analysts wrote.
They also forecast that SAP could achieve the “Rule of 40,” which the business defines as the combination of revenue growth and FCF margin, by 2030, with free cash flow compounding at 18% between fiscal 2025 and 2030.
“SAP remains uniquely positioned in European software and even globally, with high and predictable growth combined with meaningful margin upside continuing to stand out, in our view,” Barclays concluded.