Jefferies analyst Charles Brennan has revised the price target for SAP (SAP, Financial), lowering it from EUR 300 to EUR 290 while maintaining a Buy rating on the stock. Brennan attributes the recent price movement primarily to changes in index positioning rather than the company's free cash flow announcements from the Sapphire conference. Despite this adjustment, he continues to view SAP as the leading growth prospect in its sector. Furthermore, Brennan believes that the market's expectations have already been adjusted and anticipates that upcoming results will solidify this perspective.
Wall Street Analysts Forecast
Based on the one-year price targets offered by 10 analysts, the average target price for SAP SE (SAP, Financial) is $327.83 with a high estimate of $370.46 and a low estimate of $287.43. The average target implies an upside of 12.74% from the current price of $290.80. More detailed estimate data can be found on the SAP SE (SAP) Forecast page.
Based on the consensus recommendation from 28 brokerage firms, SAP SE's (SAP, Financial) average brokerage recommendation is currently 2.0, indicating "Outperform" status. The rating scale ranges from 1 to 5, where 1 signifies Strong Buy, and 5 denotes Sell.
Based on GuruFocus estimates, the estimated GF Value for SAP SE (SAP, Financial) in one year is $204.90, suggesting a downside of 29.54% from the current price of $290.8. GF Value is GuruFocus' estimate of the fair value that the stock should be traded at. It is calculated based on the historical multiples the stock has traded at previously, as well as past business growth and the future estimates of the business' performance. More detailed data can be found on the SAP SE (SAP) Summary page.
SAP Key Business Developments
Release Date: April 22, 2025
- Current Cloud Backlog: EUR18.2 billion, up 29%.
- Cloud Revenue: Increased by 26% year-on-year.
- Cloud ERP Suite Growth: 33% increase, accounting for 85% of total cloud revenue.
- Total Revenue: EUR9 billion, up 11%.
- Operating Profit: Non-IFRS operating profit up 58% to EUR2.5 billion.
- Cloud Gross Margin: Improved by 2.6 percentage points to 75%.
- Operating Cash Flow: Increased by 31% to EUR3.8 billion.
- Free Cash Flow: Increased by 36% to EUR3.6 billion.
- Basic IFRS Earnings Per Share: EUR1.52.
- Non-IFRS Earnings Per Share: EUR1.44.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- SAP SE (SAP, Financial) reported a 29% increase in its current cloud backlog, reaching EUR18.2 billion in Q1 2025.
- Cloud revenue grew by 26% year-on-year, with the cloud ERP suite showing a 33% increase.
- Operating profit increased by 58% in Q1, driven by strong execution of SAP's transformation program.
- SAP SE (SAP) maintained its position as the number one enterprise application software vendor according to IDC and Gartner.
- The company is seeing strong customer engagement across various industries, with significant deals in the automotive sector and public sector.
Negative Points
- Transactional cloud revenues experienced a slight decline in Q1, reflecting macroeconomic challenges.
- There is uncertainty regarding the impact of global trade disputes and tariffs on future conversion rates and revenue growth.
- The cloud revenue growth decelerated slightly from Q4, partly due to delayed ramp-ups from some deals.
- SAP SE (SAP) faces potential risks from geopolitical tensions and tariffs, which could impact its cloud gross margins.
- The company acknowledges the difficulty in making projections for the entire year due to ongoing macroeconomic uncertainties.
