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SAP is working with NetApp to integrate more advanced data storage tools into its own cloud platform. This partnership helps SAP provide the reliable and fast storage that large businesses need when they move their most important data, like finance and supply chain records, to the cloud. While this is a technical update, it supports SAP's larger goal of making its cloud infrastructure as powerful as the old on-premise servers it is replacing. Making that transition smoother for customers is key to keeping the company's cloud revenue growing at its current 25 percent pace.
Source: Business Wire
Jefferies raised its price target for SAP from $250 to $260 on Tuesday. This move reflects a growing expectation that the company will continue to successfully move its large customer base over to its modern cloud software. Other analysts have also been nudging their targets higher, bringing the average estimate across the market to $242. While a target change on its own is routine, it shows that analysts are becoming more comfortable with the company's growth path. The new $260 target sits well above the current price of about $209, suggesting the firm sees plenty of room for the stock to rise as the business shifts more of its sales to predictable monthly subscriptions.
Source: Jefferies
Argus Research raised its target for SAP from $215 to $265 on Thursday. This move puts their target well above the average analyst estimate of $237 and suggests they see more room for the stock to rise from its current price of about $213. While the firm did not change its overall rating, the higher target reflects a belief that SAP's shift to cloud-based software is creating a more valuable business. Other analysts have been more cautious lately, but this update points to a more optimistic view of how quickly the company can grow its recurring revenue.
Source: Argus Research
UBS, a major global bank, lowered its rating on the company from a buy to a neutral grade. This change suggests the firm's analysts believe the stock is now fairly priced and may not offer the same upside as before, even as the business continues its shift to cloud software.
While the company is still growing its cloud backlog, a neutral rating often means analysts want to see more proof of profit growth before recommending it as a buy again. The average target price across all major firms now sits at about $228, which is roughly 8 percent higher than where the stock trades today.
An executive at the company recently pushed back against the idea that the software industry is entering a long-term slump. The firm is betting that its new artificial intelligence tools will help it win more deals against rivals like Palantir by making its software more useful for everyday business tasks.
This matters because the company is in the middle of a major shift to the cloud, where it sells software as a subscription rather than a one-time purchase. If these AI features can prove they save customers time and money, it makes it much harder for those businesses to switch to a competitor's platform.
Management has a history of setting reachable targets and clearing them, though a recent large miss suggests the business is becoming harder to predict as it shifts to the cloud.
| Expectation | |
|---|---|
| EPS | $2.04 |
| Revenue | $11.53B |