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On Friday, UBS analyst Michael Briest increased the price target for SAP stock to EUR307.00 from the previous EUR265.00, while reaffirming a Buy rating on the shares. The adjustment follows SAP’s recent SAPPHIRE event, where the company showcased its resilience in demand for its offerings, especially RISE, despite economic challenges. Currently trading near its 52-week high of $304.43, SAP has demonstrated remarkable strength with a 65.81% return over the past year. According to InvestingPro data, analysts maintain a strong bullish consensus on the stock, with price targets ranging from $286.31 to $361.
Briest’s remarks highlighted the emphasis SAP placed on its artificial intelligence (AI) and data cloud initiatives during the event. He noted that these areas are logical focuses for SAP, but also pointed out that the appeal of the Business Data Cloud (BDC) would be diminished without the partnership with DataBricks. Briest underlined the importance of a standardized data model across various business applications, such as finance, human capital management, supply chain, and customer support. Such standardization facilitates easier deployment and management of AI for customers. With a robust market capitalization of $352.64 billion and impressive revenue growth of 10.51% over the last twelve months, SAP continues to demonstrate its market leadership in enterprise software solutions.
The analyst further elaborated that while the concept presented by SAP is sound, the company must deliver on these AI capabilities to effectively integrate various elements of its offerings. SAP has set a target to introduce over 400 AI use cases by the end of the year, a significant increase from the current 230. InvestingPro analysis indicates that SAP maintains a healthy financial position with a "GOOD" overall health score, supporting its ambitious AI expansion plans.
SAP’s focus on expanding its AI use cases is part of its strategy to provide more comprehensive solutions to its customers. By strengthening its AI and data cloud services, SAP aims to enhance the efficiency and effectiveness of its business applications, thereby supporting clients in managing complex data and processes with greater ease.
The increased price target by UBS reflects confidence in SAP’s strategic direction and its ability to execute on its AI and cloud initiatives. The company’s efforts to innovate and adapt to a challenging economic environment appear to resonate with analysts looking at its potential for growth and value creation.
In other recent news, SAP SE (ETR:SAPG) has announced significant advancements in its Business AI capabilities, aiming to boost business productivity by up to 30 percent. The company introduced innovations such as an expanded AI assistant, Joule, and collaborations with companies like Perplexity and Palantir (NASDAQ:PLTR) to enhance cloud migration efforts. These developments were unveiled at SAP’s annual Sapphire conference in Orlando. In terms of financial outlook, TD Cowen raised its price target for SAP to $350, maintaining a Buy rating, citing optimism about SAP’s growth and margin acceleration strategy. Meanwhile, JMP Securities also maintained a Market Outperform rating with a $330 price target, highlighting SAP’s valuation and growth potential. JPMorgan and KeyBanc both reaffirmed their Overweight ratings with price targets of EUR290, emphasizing SAP’s strategic pivot towards suite-as-a-service applications and its partnership with Databricks. These analyst ratings reflect confidence in SAP’s ability to navigate its transformation strategy and capitalize on new opportunities in AI and cloud services.
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