Analyst Derrick Wood from TD Cowen maintained a Buy rating on SAP AG (SAP – Research Report) and increased the price target to $320.00 from $315.00.
Derrick Wood’s rating is based on SAP’s ability to maintain its growth projections despite a mixed first quarter performance. The company experienced a slight delay in cloud and software growth, but this was attributed to postponed go-lives from previous deals, which are expected to catch up in the subsequent quarter. The management’s confidence in the future is bolstered by a consistent backlog growth and stable conversion rates, indicating sustained demand for SAP’s cloud ERP suite.
Moreover, SAP’s business model shows resilience, particularly in its cloud migration and ERP/Supply Chain systems, which are essential for companies navigating regulatory and trade changes. The inclusion of AI in a significant portion of orders is also seen as a driver of efficiency for customers. Despite potential macroeconomic risks, such as a global recession, SAP’s management has not observed any significant pressure on growth rates. The attractive valuation of SAP shares further supports the Buy rating, as the company is expected to continue its growth trajectory and margin expansion.
In another report released on April 16, BMO Capital also maintained a Buy rating on the stock with a $300.00 price target.