SAP SE upgraded at Jefferies but valuation ‘still not compelling’

By Sam Boughedda

Jefferies upgraded shares of SAP SE ADR (NYSE:) to Hold from Underperform, lifting the price target to €115 from €105 per share in a note Thursday.

The firm told investors in a note that previous catalysts, such as SAP FY25 targets disappointing and the stock looking expensive vs Microsoft (NASDAQ:), have played out.

The note explained that while the firm’s stance is becoming incrementally more positive, there are three primary reasons holding them back from a Buy rating.

“In our view company communication remains too optimistic. This has the impact of raising buy-side expectations, making it challenging to deliver good news. Notably, we see no obvious conservatism in FY25 targets,” wrote the analyst. “Revised targets represent the start of a new chapter under a new CFO. However, there are still accounting debates to fully digest relating to share-based comp, receivables factoring, and capitalised sales commissions.”

The analyst concluded that while SAP now trades at a discount to Microsoft, the “valuation is still not compelling.”