On Tuesday, DAX 40-listed SAP SE (DE:SAP) unveiled a new executive board division to drive more growth through its cloud business. The company has witnessed solid growth in its cloud segment, which has paved the way for the next round of growth, considering the buzz around AI (artificial intelligence).
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The stock is trading up by 0.52% at the time of writing today. In 2023, SAP shares gained over 30%, driven by the growth in the company’s cloud business.
New Board Dedicated to Cloud
The new board, which will be led by Thomas Saueressig, is scheduled to start its operations on April 1, 2024. The main objective of the board is to assist customers with cloud transformation and speed up the adoption of innovative products. The board will also focus on enhancing overall customer satisfaction with SAP’s integrated portfolio.
Muhammad Alam will join the company’s executive board and succeed Thomas Saueressig. He will assume the responsibility for SAP’s product engineering.
In its third quarter of 2023, SAP experienced a 23% increase, at constant currencies, in its cloud revenue. Notably, SAP S/4HANA cloud revenue surged by 77% in constant currencies to €914 million. SAP S/4HANA’s cloud backlog saw a substantial increase of 66%, reaching €4.20 billion.
For the full-year results of 2023, the company projected cloud revenue in the range of €14.0 to €14.2 billion at constant currencies, representing a projected increase of 23% to 24% from the previous year.
Analysts are also bullish on SAP stock, considering the company’s prospects in the cloud business. Yesterday, analyst Chandramouli Sriraman from Stifel Nicolaus confirmed a Buy rating on the stock, stating that FY24 would be a “crucial year” for the company. He is optimistic that the cloud momentum will drive top-line, operating profit, and free cash flow growth through 2025 and beyond.
Is SAP Stock a Buy or Sell?
On TipRanks, SAP stock has a Strong Buy consensus rating based on 15 recommendations. It includes 12 Buy and three Hold ratings. The SAP share price target is €148.44, which is 6.6% above the current trading level.
