The Germany-based enterprise applications company's "key enabler of success is its in-memory computing platform, HANA, and its ability to facilitate a transition to the cloud and drive an application refresh cycle," analysts said.
"Next generation applications will differentiate on data, not process, and SAP is well-positioned to capture this opportunity. However, we believe it is prudent to wait for more evidence of HANA-enabled apps before becoming constructive," analysts added.
Shares of SAP are up 1.5% to $69.65 inn pre-market trade.
Separately, TheStreet Ratings team rates SAP SE as a Buy with a ratings score of B-. TheStreet Ratings Team has this to say about their recommendation:
"We rate SAP SE (SAP) a BUY. This is driven by multiple strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, reasonable valuation levels, expanding profit margins and notable return on equity. We feel these strengths outweigh the fact that the company has had sub par growth in net income."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- SAP's debt-to-equity ratio is very low at 0.25 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.02, which illustrates the ability to avoid short-term cash problems.
- The gross profit margin for SAP SE is currently very high, coming in at 76.13%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 21.93% is above that of the industry average.
- The revenue fell significantly faster than the industry average of 28.1%. Since the same quarter one year prior, revenues fell by 22.8%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
- The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Software industry and the overall market, SAP SE's return on equity exceeds that of both the industry average and the S&P 500.
- You can view the full analysis from the report here: SAP Ratings Report