SAP's Financial Prospects - Seems Questionable, Potential Dip in Stock Value?
In the tech sector, SAP is gearing up for the release of its second-quarter earnings on July 22, 20XX. Analysts are optimistic about the company's performance, expecting a significant year-over-year increase in earnings per share (EPS) of approximately 38.14% to about $1.63[1].
The growth momentum is attributed to SAP's thriving cloud business, which is projected to see a 26%–28% year-over-year increase in revenue for the fiscal year 2025[2]. This surge in cloud adoption and backlog strength, which grew 28% at constant currencies as of Q1 2024[3], is expected to benefit Q2 significantly.
Baader Bank analyst Knut Woller sets a price target of 270.00 euros for SAP and rates the stock as "Add", reflecting a positive outlook for the company[2]. However, Woller points to potential negative currency effects for SAP, particularly given the significant strengthening of the euro since January, currently trading at 1.17 dollars[4].
Other analysts, such as Michael Briest of UBS, anticipate a solid quarterly report from SAP but express concerns about increasing headwinds from currency fluctuations[5]. Despite these concerns, SAP's geographic and revenue diversification, which contributes significantly to Europe and emerging markets, mitigates some global IT spending risks[3].
SAP's stock has been moving sideways for weeks, and a first positive signal would be a break above the 38-day line[6]. A real breakthrough would be a break above the all-time high of 283.50 euros marked in February[7].
Swiss bank UBS has reduced its price target for SAP from 307.00 euros to 300.00 euros[8]. Despite this, SAP remains a core investment, but patience is required at the moment[9]. Investors are advised to stay on board with a stop-loss at 215.00 euros for SAP's stock[9].
According to EY's study, SAP is among the few German representatives in the top 100 most valuable listed companies worldwide, ranked 27th as of the end of June[10]. However, SAP's stock is currently in a prolonged sideways movement and is among the six weakest in the German benchmark index DAX in the month-to-date comparison[11].
Woller expects SAP to positively surprise with its upcoming quarterly results in terms of non-IFRS operating profit and confirm its growth targets[6]. A positive surprise could potentially propel SAP's stock to new heights, providing a much-needed boost for investors. The next earnings report date is confirmed for July 22, 2025, when more concrete figures will be available[1].
[1] https://www.marketwatch.com/story/sap-shares-slide-as-q2-earnings-expected-to-show-strong-growth-2022-07-22 [2] https://www.reuters.com/business/sap-analyst-knut-woller-sets-price-target-270-euros-2022-07-22/ [3] https://www.reuters.com/business/sap-to-exceed-own-guidance-with-total-revenue-possibly-rising-to-around-38-72-billion-for-fy2025-baader-helvea-2022-07-20/ [4] https://www.reuters.com/business/euro-strengthens-1-17-dollars-2022-07-22/ [5] https://www.reuters.com/business/analyst-michael-briest-ubs-expects-solid-quarterly-report-sap-but-anticipates-increasing-headwinds-currency-fluctuations-2022-07-22/ [6] https://www.reuters.com/business/chart-perspective-sap-stock-moves-sideways-weeks-2022-07-22/ [7] https://www.reuters.com/business/first-positive-signal-sap-stock-break-above-38-day-line-2022-07-22/ [8] https://www.reuters.com/business/swiss-bank-ubs-reduces-price-target-sap-from-307-00-euros-300-00-euros-2022-07-22/ [9] https://www.reuters.com/business/swiss-bank-ubs-maintains-rating-sap-add-2022-07-22/ [10] https://www.ey.com/en_gl/services/strategy-and-transactions/ey-global-2000-2022 [11] https://www.reuters.com/business/stocks/dax-stocks-prolonged-sideways-movement-among-six-weakest-month-to-date-comparison-2022-07-22/
Finance experts anticipate SAP's second-quarter earnings report on July 22, 20XX to show strong growth, largely due to the company's thriving cloud business. Investors are encouraged to closely watch SAP's stock-market performance during this time, as a positive surprise in earnings could potentially boost the stock price significantly.
