Citizens JMP has increased its target price for SAP (SAP, Financial) from $330 to $375, while maintaining an Outperform rating on the stock. Although SAP delivered mixed results for the second quarter, the company remains focused on navigating various macroeconomic challenges, which include potential delays in closing deals in sectors like U.S. federal and manufacturing due to tariffs.
Despite these challenges, SAP has upheld its guidance for 2025, indicating confidence in its strategic direction. The firm is facing some headwinds due to a declining support stream as it transitions to cloud-based solutions, but Citizens JMP still considers SAP a promising option for long-term investment growth.
Wall Street Analysts Forecast
Based on the one-year price targets offered by 11 analysts, the average target price for SAP SE (SAP, Financial) is $336.29 with a high estimate of $405.46 and a low estimate of $287.90. The average target implies an upside of 9.80% from the current price of $306.29. 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 $209.76, suggesting a downside of 31.52% from the current price of $306.29. 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: July 22, 2025
- Cloud Revenue: Increased by 28% year on year.
- Cloud ERP Suite Growth: 34% growth in Q2.
- Total Revenue: EUR9 billion, up 12%.
- Current Cloud Backlog: EUR18.1 billion, up 28%.
- Operating Profit: Non-IFRS operating profit up 35% to EUR2.6 billion.
- Cloud Gross Margin: Expanded by 1.8 percentage points to 75.2%.
- Free Cash Flow: Increased by 83% to EUR2.4 billion.
- Software Licenses Revenue: Decreased by 13%.
- Non-IFRS Earnings Per Share: Increased to EUR1.50.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- SAP SE (SAP, Financial) reported a 28% increase in cloud revenue for Q2 2025, driven by strong performance in the Cloud ERP Suite.
- Operating profit surged by 35%, showcasing the effectiveness of SAP SE (SAP)'s business model and cost transformation program.
- SAP SE (SAP) formed a strategic partnership with Alibaba, expanding its market potential in China.
- The company has a robust pipeline for the second half of 2025, with strong coverage similar to the previous year.
- SAP SE (SAP) is leveraging Business AI internally to boost productivity, resulting in significant operational efficiencies.
Negative Points
- Uncertainty in global markets, particularly in the US public sector and manufacturing sectors affected by tariffs, is causing elongated sales cycles.
- Software licenses revenue decreased by 13% in Q2, reflecting a strategic shift towards cloud-based models.
- The sequential deceleration in current cloud backlog growth indicates potential dampening effects on bookings.
- Transactional business, such as temporary workforce and travel-related revenues, continues to be disappointing.
- There is a cautious outlook on macroeconomic conditions, with potential impacts from geopolitical developments and trade policy uncertainties.
