Germany-based SAP SE (DE:SAP) has earned bullish reviews from multiple analysts after the release of its Q3 2024 results. SAP’s Q3 results exceeded analysts’ expectations on both the top and bottom lines, fueled by a surge in Cloud revenues. This led to positive reactions from analysts, resulting in six Buy recommendations. SAP shares in Germany gained 2.14% in yesterday’s trading session.
SAP is a software company that specializes in enterprise solutions. Its cloud services are widely used, helping it lead the industry.
SAP Raises 2024 Outlook Amid Cloud Growth
SAP raised its outlook for 2024 after delivering solid results in its Cloud segment in the third quarter. SAP expects its Cloud and Software revenue to be in the range of €29.5 to €29.8 billion, up from the previous range of €29.0 and €29.5 billion at constant currency. The company also increased its outlook for free cash flow, now expected to be between €3.5 billion and €4 billion, up from around €3.5 billion earlier.
In Q3, the company’s Cloud revenue soared 25% year-over-year to €4.35 billion, while total revenue increased 9%.
Analysts Maintain Bullish Outlook on SAP
Post-results, SAP stock has received eight recommendations from analysts, including six Buy ratings. Overall, analysts praised the strong quarterly numbers and noted that the increased 2024 guidance was much better than expected.
Analyst Charles Brennan from Jefferies assigned a Buy rating on SAP stock, predicting 7% upside potential. Brennan expects the market to respond positively to the results. However, he added that cautionary comments about the macro environment and reminders of challenging comparisons for Q4 may dampen some of the excitement.
Meanwhile, Frederic Boulan from Bank of America Securities (BofA) maintained a Buy rating while raising the price target on the stock from €235 to €243. He now forecasts an upside of 13%. Looking ahead, Boulan is also cautious because of the challenging macro environment.
However, he is optimistic about SAP’s mid-to-long-term growth potential and reiterated that the company is BofA’s top pick in software. He added that the company’s focus on cloud ERP and partnerships with hyperscalers will greatly improve cloud margins by 2025.
Are SAP Shares a Good Buy?
On TipRanks, SAP stock has a Strong Buy rating based on 18 recommendations. It includes 14 Buys and four Holds. The SAP share price forecast is €218.10, which implies a slight change of 1.17% from the current level.
Year-to-date, SAP stock has gained 57%.
