SAP is not as well known worldwide as Microsoft, but the German company is one of the leading providers of software solutions that organize different processes within and across companies. Its product portfolio consists of business applications for medium and large companies as well as standard solutions for small and medium-sized enterprises. In the third quarter, the company achieved a adjusted profit of 1.45 euros per share from the ongoing business, up from 1.10 euros in the previous year. Analysts had expected 1.36 euros. The quarterly turnover was 7.74 billion euros, compared with 7.48 billion euros the year before. Analysts had expected 7.80 billion euros.

„The numbers confirm what we have been saying all along: 2023 is the year of double-digit profit growth,“ said CEO Christian Klein. The fact remains, however, that SAP could not exceed the analysts‘ sales forecasts. For the 2023 financial year, the company expects currency-adjusted cloud revenues in a range of 14.0 billion euros to 14.2 billion euros. This corresponds to a growth rate of 23% to 24%. The operating result is expected to be in the range of 8.65 billion euros to 8.95 billion euros. This range corresponds to a currency-adjusted growth rate of 8% to 12%.

Since the beginning of the year, the software share has run well, as can be seen in the chart. But how much potential is there for you as an investor? 17 out of 27 analysts still recommend buying and 10 analysts recommend holding. The average analyst target price is 139 euros and offers you virtually no potential. However, some analysts consider 162 euros possible, which offers you a potential of 18%. I don’t want to hide, however, that the target price ranges are quite wide. Because the lowest target price is 90 euros. And that means a heavy downward potential of -34%. With a P/E of 13 based on the earnings estimates for 2024, the software stock is moderately valued.