SAP: Jefferies initiates coverage with 'buy'
(CercleFinance.com) - Jefferies has initiated its coverage of the SAP stock with a "buy" recommendation and a target price of 120 euros, expecting growth in free cash flow (FCF) to accelerate at the German enterprise software publisher.
Although exposed to a strong product cycle in the form of S/4HANA, the share has slightly underperformed the SX8P as a result of a slower-than-expected improvement in SAP's cloud gross margin, the broker points out.
However, the broker says that with the investment phase largely over, we expect FCF growth to accelerate along with the share's valuation when investors fully appreciate the quality of SAP's cloud assets.
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The information and analyses distributed by Cercle Finance are only intended as decision-making support for investors. Cercle Finance's responsibility may not be entailed, either directly or indirectly following the use of such information and analyses by readers. Any non-professional investor is recommended to consult a professional advisor before making any investment decision. This indicative information in no way constitutes any invitation to sell or buy securities.
Although exposed to a strong product cycle in the form of S/4HANA, the share has slightly underperformed the SX8P as a result of a slower-than-expected improvement in SAP's cloud gross margin, the broker points out.
However, the broker says that with the investment phase largely over, we expect FCF growth to accelerate along with the share's valuation when investors fully appreciate the quality of SAP's cloud assets.
Copyright (c) 2018 CercleFinance.com. All rights reserved.
The information and analyses distributed by Cercle Finance are only intended as decision-making support for investors. Cercle Finance's responsibility may not be entailed, either directly or indirectly following the use of such information and analyses by readers. Any non-professional investor is recommended to consult a professional advisor before making any investment decision. This indicative information in no way constitutes any invitation to sell or buy securities.