SAP "hold"

22.05.07 - AC Research

LONDON, May 22 (newratings.com) - Analyst Henning Wagener of AC Research reiterates his "hold" rating on SAP AG (SAP).

According to AC Research?s research note dated May 21 and published this morning, the company is facing the threat of a legal conflict. In March, US competitor Oracle filed a lawsuit against SAP. Allegedly, SAP unlawfully gained access to a password-protected Oracle website, downloading several thousand documents. In terms of the amount of damages claimed, Oracle did not offer any comments. At the same time, the US company would not agree to settle the dispute outside the court. Thus, the conflict between SAP and Oracle reached a new quality level. However, SAP has been vehemently denying the accusations.

Currently there is no clarity into how much truth really lies in the accusations put forward by Oracle against SAP, the analyst says. Against this background, it is also hardly possible to make any forecasts as to the outcome of the possible legal conflict, the analyst adds. However, the dispute must be clearly seen as a negative situation for SAP. The accusations alone may already serve to upset customers, something which in turn may have a negative impact on the company?s business performance.

At Friday?s closing price of ?34.40 and a 2007 P/E ratio of roughly 20, the company?s stock still seems to enjoy a rather moderate rating, considering SAP?s fundamentally very positive market position. The analyst mentions, however, that the looming legal conflict with Oracle may somewhat burden the company?s share price. Against this background, SAP?s stock is expected to perform in-line with the market over the next few weeks. Should the accusations prove to be unfounded, though, the company?s share price should continue to accelerate.

AC Research reiterates its "hold" rating on SAP.