SAP's fair value price target was raised slightly from €288.14 to €288.67. Analysts point to resilient earnings visibility and ongoing cloud growth potential, despite mixed revenue guidance.

Analyst Commentary

Analyst sentiment on SAP remains mixed, as recent revisions reflect both optimism around the company’s long-term positioning and caution over near-term revenue trends. Below are the main perspectives highlighted by Street Research:

• Bullish analysts have raised price targets, citing resilient earnings visibility and strong cloud growth potential, even in a softer macroeconomic climate.
• Several see the recent share price pullback as a buying opportunity, arguing that the business fundamentals and strategic positioning remain robust.
• There is consensus that SAP’s ongoing transition to cloud is a key lever for durable long-term growth and continued acceleration in revenue going into next year.
• Some note an upbeat management tone regarding the business pipeline for Q4 and beyond, which supports expectations of further revenue improvement.

• Bearish analysts point out that cloud revenue guidance is at the lower end of market expectations, which could limit upside in the coming fiscal year.
• Concerns persist over a stronger than expected decline in SAP’s traditional software business, potentially offsetting gains from cloud conversion efforts.
• Views on valuation have become more cautious, with some noting that the stock is now regarded as "highly valued," which could limit the potential for near-term appreciation.
• There is disappointment regarding near-term guidance, particularly for the fourth quarter, which fell short of some analysts’ expectations.

What's in the News

• BlackLine shareholders are increasing pressure on the company to consider a sale after reported takeover interest from SAP, with major investors contacting BlackLine’s board directly (Bloomberg).
• SAP is considering making a new bid for BlackLine, after a previous offer of nearly $4.5 billion was rejected by the accounting software firm earlier this year (Reuters, Bloomberg).
• SAP is preparing to offer concessions to resolve an EU antitrust probe and avoid a potentially significant fine. The European Commission is expected to seek feedback from industry stakeholders soon (Reuters).
• Nvidia and Deutsche Telekom are planning a €1 billion data center in Germany, with SAP expected to be a major customer of the new facility (Bloomberg).
• The U.S. Supreme Court declined to hear SAP’s appeal in an antitrust case brought by Teradata, allowing the litigation to move forward in lower courts (Reuters).

Valuation Changes

• Fair Value Price Target has risen slightly from €288.14 to €288.67.
• Discount Rate edged up from 6.33% to 6.36%.
• Revenue Growth forecasts have eased from 13.01% to 12.68%.
• Net Profit Margin is notably higher, increasing from 19.72% to 21.38%.
• Future P/E ratio has declined from 38.62x to 36.03x.