SAP ?accumulate?

06.12.06 - AC Research

LONDON, December 6 (newratings.com) ? Analyst Henning Wagener of AC Research reiterates his "accumulate" rating on SAP AG (SAP).

According to AC Research?s research note dated December 5 and published this morning, the company has offered further insights into its growth targets up to 2010. In the scope of an investor conference, SAP announced in Las Vegas on Monday that it expects significant growth in the segment of new customers in the next few years. By 2010, the number of customers would increase to 100,000. Compared to 2005, this means that the number of customers will almost triple. Market potential for product sales shall be raised to $70 billion by 2010. In 2005, the company reached roughly $30 billion in this respect. This potential shall be acquired in particular by a better penetration in the segment of medium sized companies and the launching of new products.

The analyst views the company?s statements as positive. There are some rather elevated market potentials for SAP, above all in the segment of medium sized companies, the analyst mentions. As far as products are concerned, the company will introduce a new platform for commerical banks next year. At the same time, SAP also announced its plans to continue its acquisition strategies focused on supplements.

In all, AC Research expects SAP to continue gaining additional market share in the next few years. Here, the driving force could be the segment of medium sized companies, where experts still view some additional potential for SAP.

At Monday?s closing price of ?155.25 and a 2006 P/E ratio of 25, and considering SAP?s very favourable market position and the still existing growth potentials, the company?s stock seems to enjoy a rather moderate rating. Therefore, the analyst still views a slightly positive chances-risk ratio for an investment in the company?s stock.

AC Research reiterates its "accumulate" rating on SAP.