SAP breaks out to the upside after strong earnings.

Last Updated: 12. Februar 2024By

Apple, Facebook, Google – Europe has little to offer against the high-tech dominance of the USA. One exception comes from Germany. SAP is one of the world’s leading providers of software solutions that organize various processes within a company and across corporate boundaries. The product portfolio includes business applications for medium and large enterprises, as well as standard solutions for small and medium-sized businesses. Now, the DAX company has released its earnings. Should you get in now?

Exceeding analyst expectations In the fourth quarter, cloud revenue climbed to 3.7 billion euros. For the full year, cloud revenue was 13.7 billion euros, in line with analyst expectations according to Visible Alpha. The currency-adjusted growth rate was 23%, reaching the lower end of the company’s target of up to 24%. Cloud and software revenue together reached 26.9 billion euros in the past year, a currency-adjusted increase of 9%.

New focus on AI The software company also announced that it plans to shift its focus to AI with a restructuring plan that will affect around 8,000 positions through voluntary leave and retraining, the company said. The expected restructuring costs of around 2 billion euros will primarily impact operating profit in the first half of 2024.

CEO satisfied For 2024, a currency-adjusted cloud and software revenue of between 29 billion euros and 29.5 billion euros is expected. Operating profit is estimated to be between 7.6 billion euros and 7.9 billion euros.

Analysts and investors satisfied – a good start in 2024 Conclusion: This year, the German software stock has started off strong. Analysts are also still convinced of the stock. 17 out of 16 analysts recommend buying, 8 recommend holding, and only one analyst would sell their shares. The current price is already close to the average analyst price target of 171 euros, although it has already been significantly increased. The highest analyst price target is 200 euros. Additionally, as an investor, you can benefit from a dividend yield of 2.38%. However, with a P/E ratio of over 50, SAP is already highly valued.