SAP downgraded to "underweight"

24.07.06 - J.P. Morgan Securities

LONDON, July 24 (newratings.com) - Analysts at JP Morgan downgrade SAP AG (SAP-EUR) from "overweight" to "underweight," while reducing their estimates for the company. The target price has been reduced from ?225 to ?120.

In a research note published this morning, the analysts mention that the company has posted its Q2 license revenues significantly short of the expectations. The shortfall indicates SAP?s inability to fully recognise already-booked license revenues on account of a changing business customer requirement model, the analysts believe. The license growth estimate of the company for 2006 has been reduced from 17% to 9.5% to reflect an additional shortfall in the H2 results. The EPS estimates for 2006 and 2007 have been reduced from ?6.20 to ?6.00 and from ?7.50 to ?7.00, respectively.