SAP "buy," target price reduced

26.01.07 - UBS

LONDON, January 26 (newratings.com) - Analysts at UBS reiterate their "buy" rating on SAP AG (SAP), while reducing their estimates for the company. The target price has been reduced from ?47.50 to ?41.

In a research note published yesterday, the analyst mentions that the company has announced its software, support, and subscriptions growth guidance for 2007 at 11%-12%, marginally ahead of the estimates. SAP has indicated its plans of investing ?300-?400 million in the mid-market over the next couple of years. The analysts expect this to adversely impact the company?s EBIT margins by 170bps in 2007 and by 190bps in 2008. The EPS estimates for 2007 and 2008 have been reduced by 4% and 6%, respectively.