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SAP's Revenue Will Soar by Over 10% as Profit Margins Improve
Catalysts AI functionality is a new world Assumptions Strong brand can deliver higher revenue growth in heated/inflationary climate While AI investment will be expensive, there will be reasonable increased profit growth with productivity and functionality benefits. Risks Global economic and political climate, along with investment risk in AI, necessitates higher risk level for discount calc.Read more
Medium term lower revenue growth implies falling expectations and thus lower future PE acceptance.
This narrative is brief and simply stands on the shoulders of the recent aggregate analysts review (Dec 2024). Put simply, if revenue grows at <15% pa and margins fall to <20% average over next 3 years, that implies a pretty consistent growth rate that contradicts the high PE ratio for this stock.Read more
Limited revenue and margin growth inside increasingly risky global market conditions
Next 6-12 months: Global economic slowdown: A recession in key markets (US, Europe) could reduce IT spending. Best case scenario revenue can grow 10% YoY max, given forecast recently of 4% growth.Read more