On Wednesday, BMO Capital Markets updated its outlook on SAP SE (ETR:SAPG) (SAP:GR) (NYSE: SAP), raising the price target to €320 from the previous €300. The firm has maintained its Outperform rating on the shares of the enterprise software giant, which currently commands a market capitalization of $321 billion. According to InvestingPro data, SAP is currently trading above its Fair Value. The adjustment follows SAP’s robust performance in the March quarter, which marked a strong beginning to the software earnings season.
Keith Bachman, an analyst at BMO Capital, noted SAP’s March quarter results were better than anticipated, suggesting a positive trend relative to many other companies the firm covers. The company’s recent performance shows impressive revenue growth of 9.51% and a robust gross profit margin of 73.19%. Bachman highlighted the factors contributing to SAP’s strong performance, including improvements in its solution portfolio and the ongoing transition to cloud services.
SAP’s financial outlook also received positive remarks, with Bachman indicating potential for the company’s CY25 free cash flow (FCF) guidance to exceed expectations. InvestingPro analysis reveals that 2 analysts have recently revised their earnings upwards for the upcoming period, and the company maintains an impressive 34-year track record of consistent dividend payments. This optimism is contingent on a stable, though not necessarily outstanding, macroeconomic environment.Want deeper insights? InvestingPro offers exclusive access to detailed financial analysis and 12 additional ProTips for SAP, available in our comprehensive Pro Research Report.
The analyst’s commentary underscored the belief that SAP’s results and guidance could outshine those of many peers within BMO Capital’s coverage universe. The firm’s decision to maintain an Outperform rating reflects confidence in SAP’s strategic direction and its ability to capitalize on its enhanced product offerings and cloud conversion momentum.
In summary, BMO Capital’s revised price target for SAP stock reflects a constructive view of the company’s recent financial performance and future prospects, underpinned by a solid start to the year and the potential for upward revisions to its cash flow forecasts.
In other recent news, SAP AG (NYSE:SAP) announced its first-quarter results for 2025, surpassing analyst expectations with non-IFRS earnings per share of €1.44 against the anticipated €1.32, and an operating profit of €2.46 billion compared to the expected €2.25 billion. Total revenue reached €9.01 billion, marking an 11% year-over-year increase in constant currency terms, although slightly below the consensus estimate of €9.07 billion. The company’s cloud segment showed a robust 26% growth in constant currency, while the cloud backlog maintained a 29% growth rate. In analyst updates, KeyBanc maintained an Overweight rating with a price target of EUR290, citing SAP’s strong Cloud ERP growth. JMP reiterated a Market Outperform rating with a $330 target, emphasizing SAP’s market performance. Citi adjusted its price target to EUR280 from EUR300 but maintained a Buy rating, highlighting SAP’s resilience amid uncertainties. TD Cowen raised its price target to $315, maintaining a Buy rating, and BMO reduced its target to $300 while retaining an Outperform rating. These developments underscore SAP’s strategic positioning and potential for growth despite macroeconomic challenges.
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