We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
SAP Surges 48% Year to Date: Will the Upward Trend Continue?
Read MoreHide Full Article
SAP SE (SAP - Free Report) is witnessing strong momentum, with shares having gained 48% year to date compared with the S&P Composite’s growth of 25.1%.
With healthy fundamentals and strong growth opportunities, this Zacks Rank #2 (Buy) stock appears to be a solid investment option at the moment.
SAP’s earnings per share (EPS) are indicated to climb 26.6% and 19.6% on a year-over-year basis to $5.42 and $6.48 in 2023 and 2024, respectively. Revenues for 2023 and 2024 are projected to rise 2% and 9.7% to $33.12 billion and $36.3 billion, respectively.
SAP is one of the largest independent software vendors in the world. It is also the leading provider of enterprise resource planning (ERP) software.
Image Source: Zacks Investment Research
What Is Driving SAP’s Performance?
SAP’s performance is gaining from strength in its cloud business across all regions. Its efforts have received impetus with the launch of Rise with SAP solution. This solution helps companies transform their business processes and operations to become more agile, digital and intelligent. RISE with SAP solution continues to gain significant traction and will aid the company in driving its market share in the cloud ERP solutions space.
Momentum in SAP’s business technology platform, particularly S/4HANA solutions, augurs well. More companies have begun deploying S/4HANA solutions partly or entirely in the cloud. In the third quarter of 2023, SAP S/4HANA cloud revenues increased 67% (up 77% at cc) year over year to €914 million. SAP S/4HANA’s current cloud backlog rose 58% (up 66% at cc) year over year.
Rise with SAP will also help the company boost the uptake of its SAP S/4HANA solution by providing customers with more options for implementation and support from certified partners.
Frequent product launches like Grow with SAP and SAP Datasphere, as well as strategic acquisitions and collaborations, bode well. SAP expects to achieve €21.5 billion in cloud revenues by 2025.
Proliferation of Generative AI Bodes Well
SAP remains optimistic about the generative AI trend and expects it to positively impact revenues going forward. In September 2023, management unveiled Joule, an innovative AI copilot driven by natural language and generative capabilities. Joule will be released with SAP SuccessFactors solutions and SAP Start later this year, followed by integration with SAP S/4HANA Cloud.
Joule will be integrated into the company's cloud enterprise suite and offer proactive, contextual insights from SAP solutions and third-party sources. This will likely help customers to make faster and more informed decisions while ensuring security and compliance. It will also help to transform the user experience across departments.
Building on existing SAP Business AI offerings, Joule aligns with the firm’s broader strategy to cultivate an enterprise AI ecosystem involving direct investments and strategic partnerships with leading tech players. Prior to that, it had inked an agreement with Microsoft for teaming up on generative AI solutions to aid clients in addressing the talent gap with new recruitment and development tools.
It also invested funds in three companies, Aleph Alpha, Anthropic and Cohere, which are engaged in generative AI. Management plans to roll out new AI solutions across its portfolio going ahead.
Impressive Share Repurchase Activity
SAP's strong business momentum and Qualtrics divestiture have prompted it to boost capital returns. It has announced a new share repurchase program with a volume of up to €5 billion in May 2023, commencing from the second half of 2023. This program is projected to be fully completed by 2025 end.
This new authorization is in line with its repurchases of 14 million shares for €1.5 billion in 2020 and around 16 million shares worth €1.5 billion in 2022. As of Sep 29, 2023, SAP had repurchased 7,190,252 shares at an average price of €125.49. SAP has shares worth €902 million left under the program
Headwinds Remain
However, SAP’s performance is affected due to continued softness in the Software license and support business segment. In the third quarter, Software license and support revenues came in at €3.208 billion, which decreased 6% (down 2% at cc) year over year. Non-IFRS Software license revenues of €335 million declined 17% (down 14% at cc) year over year.
Further, global macroeconomic weakness, inflation and bumpy economic recovery in China remain concerns.
The Zacks Consensus Estimate for Blackbaud’s 2023 EPS has inched up 1.8% in the past 60 days to $3.86. BLKB’s long-term earnings growth rate is 23.4%. Blackbaud’s earnings beat the Zacks Consensus Estimate in each of the last four quarters, the average surprise being 10.6%. Shares of BLKB have gained 49% in the past year.
The Zacks Consensus Estimate for 2023 is pegged at a loss of 9 cents per share for NETGEAR, which remained unchanged in the past 30 days. NTGR’s earnings outpaced the Zacks Consensus Estimate in three of the last four quarters while missing once. The average surprise was 127.5%. Shares of NTGR were down 17% in the past year.
The Zacks Consensus Estimate for Watts Water Technologies 2023 EPS has improved by 3.9% in the past 60 days to $8.08.
WTS’ earnings surpassed the Zacks Consensus Estimate in each of the last four quarters, the average surprise being 11.8%. Shares of WTS have jumped 42.5% in the past year.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
SAP Surges 48% Year to Date: Will the Upward Trend Continue?
SAP SE (SAP - Free Report) is witnessing strong momentum, with shares having gained 48% year to date compared with the S&P Composite’s growth of 25.1%.
With healthy fundamentals and strong growth opportunities, this Zacks Rank #2 (Buy) stock appears to be a solid investment option at the moment.
SAP’s earnings per share (EPS) are indicated to climb 26.6% and 19.6% on a year-over-year basis to $5.42 and $6.48 in 2023 and 2024, respectively. Revenues for 2023 and 2024 are projected to rise 2% and 9.7% to $33.12 billion and $36.3 billion, respectively.
SAP is one of the largest independent software vendors in the world. It is also the leading provider of enterprise resource planning (ERP) software.
Image Source: Zacks Investment Research
What Is Driving SAP’s Performance?
SAP’s performance is gaining from strength in its cloud business across all regions. Its efforts have received impetus with the launch of Rise with SAP solution. This solution helps companies transform their business processes and operations to become more agile, digital and intelligent. RISE with SAP solution continues to gain significant traction and will aid the company in driving its market share in the cloud ERP solutions space.
Momentum in SAP’s business technology platform, particularly S/4HANA solutions, augurs well. More companies have begun deploying S/4HANA solutions partly or entirely in the cloud. In the third quarter of 2023, SAP S/4HANA cloud revenues increased 67% (up 77% at cc) year over year to €914 million. SAP S/4HANA’s current cloud backlog rose 58% (up 66% at cc) year over year.
Rise with SAP will also help the company boost the uptake of its SAP S/4HANA solution by providing customers with more options for implementation and support from certified partners.
Frequent product launches like Grow with SAP and SAP Datasphere, as well as strategic acquisitions and collaborations, bode well. SAP expects to achieve €21.5 billion in cloud revenues by 2025.
Proliferation of Generative AI Bodes Well
SAP remains optimistic about the generative AI trend and expects it to positively impact revenues going forward. In September 2023, management unveiled Joule, an innovative AI copilot driven by natural language and generative capabilities. Joule will be released with SAP SuccessFactors solutions and SAP Start later this year, followed by integration with SAP S/4HANA Cloud.
Joule will be integrated into the company's cloud enterprise suite and offer proactive, contextual insights from SAP solutions and third-party sources. This will likely help customers to make faster and more informed decisions while ensuring security and compliance. It will also help to transform the user experience across departments.
Building on existing SAP Business AI offerings, Joule aligns with the firm’s broader strategy to cultivate an enterprise AI ecosystem involving direct investments and strategic partnerships with leading tech players. Prior to that, it had inked an agreement with Microsoft for teaming up on generative AI solutions to aid clients in addressing the talent gap with new recruitment and development tools.
It also invested funds in three companies, Aleph Alpha, Anthropic and Cohere, which are engaged in generative AI. Management plans to roll out new AI solutions across its portfolio going ahead.
Impressive Share Repurchase Activity
SAP's strong business momentum and Qualtrics divestiture have prompted it to boost capital returns.
It has announced a new share repurchase program with a volume of up to €5 billion in May 2023, commencing from the second half of 2023. This program is projected to be fully completed by 2025 end.
This new authorization is in line with its repurchases of 14 million shares for €1.5 billion in 2020 and around 16 million shares worth €1.5 billion in 2022. As of Sep 29, 2023, SAP had repurchased 7,190,252 shares at an average price of €125.49. SAP has shares worth €902 million left under the program
Headwinds Remain
However, SAP’s performance is affected due to continued softness in the Software license and support business segment. In the third quarter, Software license and support revenues came in at €3.208 billion, which decreased 6% (down 2% at cc) year over year. Non-IFRS Software license revenues of €335 million declined 17% (down 14% at cc) year over year.
Further, global macroeconomic weakness, inflation and bumpy economic recovery in China remain concerns.
Stocks to Consider
Some other top-ranked stocks worth consideration in the broader technology space are Blackbaud (BLKB - Free Report) , NETGEAR (NTGR - Free Report) and Watts Water Technologies (WTS - Free Report) . Watts Water Technologies sports a Zacks Rank #1 (Strong Buy), while Blackbaud and NETGEAR carry a Zacks Rank #2 each. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Blackbaud’s 2023 EPS has inched up 1.8% in the past 60 days to $3.86. BLKB’s long-term earnings growth rate is 23.4%.
Blackbaud’s earnings beat the Zacks Consensus Estimate in each of the last four quarters, the average surprise being 10.6%. Shares of BLKB have gained 49% in the past year.
The Zacks Consensus Estimate for 2023 is pegged at a loss of 9 cents per share for NETGEAR, which remained unchanged in the past 30 days. NTGR’s earnings outpaced the Zacks Consensus Estimate in three of the last four quarters while missing once. The average surprise was 127.5%. Shares of NTGR were down 17% in the past year.
The Zacks Consensus Estimate for Watts Water Technologies 2023 EPS has improved by 3.9% in the past 60 days to $8.08.
WTS’ earnings surpassed the Zacks Consensus Estimate in each of the last four quarters, the average surprise being 11.8%. Shares of WTS have jumped 42.5% in the past year.