SAP SE is an enterprise cloud company and a provider of application and analytics software for enterprises in mobile enterprise management.
Due to compelling cost and innovation advantages in upgrading to the new generation of business suite S/4HANA, the firm expects a faster product cycle with 1,200 S/4 customers this year increasing to near 24,000 by 2020, Barclays noted.
"We believe the promotion program and S/4 HANA being the main vehicle to drive innovation in the future could result in cost savings for customers and should cause a faster upgrade cycle," Barclays analysts said.
Additionally, the promotion program could drive product revenues of euro 140 million in 2015 to over euro 5 billion in 2020,Barclays added.
Shares of SAP are declining 0.87% to $72.57 in morning trading Friday.
Separately, TheStreet Ratings team rates SAP SE as a Hold with a ratings score of C+. TheStreet Ratings Team has this to say about their recommendation:
"We rate SAP SE (SAP) a HOLD. The primary factors that have impacted our rating are mixed some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its reasonable valuation levels, expanding profit margins and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, weak operating cash flow and a generally disappointing performance in the stock itself."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The gross profit margin for SAP SE is currently very high, coming in at 72.47%. Regardless of SAP's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, SAP's net profit margin of 9.20% is significantly lower than the industry average.
- Net operating cash flow has decreased to $2,541.32 million or 21.57% when compared to the same quarter last year. In conjunction, when comparing current results to the industry average, SAP SE has marginally lower results.
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed against the S&P 500 and did not exceed that of the Software industry. The net income has significantly decreased by 39.5% when compared to the same quarter one year ago, falling from $735.69 million to $444.68 million.
- You can view the full analysis from the report here: SAP Ratings Report