On Tuesday, JPMorgan (NYSE:JPM) maintained a positive stance on SAP SE (ETR:SAPG) (SAP:GR) (NYSE: SAP) stock, reiterating an Overweight rating and a price target of EUR260.00. The analyst provided a comprehensive outlook on SAP's potential revenue growth, suggesting a path to approximately 15% group revenue growth by 2028.
This projection is combined with a forecast for a 35% EBIT margin, which together could result in a potential bull case target of EUR425 per share. This target implies roughly an 80% upside from current levels over a multi-year timeframe.
JPMorgan's analysis anticipates a compound annual growth rate (CAGR) of approximately 30% for earnings per share (EPS) and free cash flow (FCF) from 2024A to 2028E. The analyst underscored SAP's financial profile as globally unique and compelling, with revenue growth expected to accelerate while earnings and free cash flow increase rapidly.
The optimism from JPMorgan is also based on several factors that could drive SAP's stock performance. These include potential upside to consensus growth, earnings before interest and taxes (EBIT), and free cash flow forecasts, as well as SAP's exposure to General AI (GenAI) as the focus on AI shifts towards software.
Additionally, the potential for stock buybacks, upcoming catalysts such as earnings reports and the May 2025 Capital Markets Day (CMD), and improved execution were cited as underpinnings for SAP's position as JPMorgan's highest conviction idea in the European Software (ETR:SOWGn) sector.
The European software giant has been on a path to reshape its business model, focusing on cloud services and enterprise resource planning software. SAP's strategic pivot towards AI and software innovation is seen as a key component of its growth strategy, aligning with industry trends and customer needs.
Investors and market watchers will be looking forward to SAP's future financial reports and the May 2025 CMD for further indications of the company's progress towards the targets outlined by JPMorgan. The firm's analysis presents a bullish case for SAP's stock, highlighting the company's potential for significant growth and value creation over the coming years.
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