SAP ?accumulate?

24.08.07 - AC Research

NEW YORK, August 24 (newratings.com) ? Analyst Henning Wagener of AC Research reiterates his "accumulate" rating on SAP AG (SAP).

According to AC Research?s research note dated August 23 and published this morning, SAP has announced the date for the market introduction of its "A1S" software for medium-sized companies. Following certain delays, the company now plans to launch its on-demand software for midsize companies on September 19. Here, the midsize suite shall be offered in an on-demand model right from the start. The new software shall be provided via the internet to midsize company customers. Till now, SAP has sold its software, running it on the customers? computer systems.

The analyst considers this as rather positive news. The new solution may put SAP in a position where it could expand its market share among midsize companies. The new solution shall convince midsize companies through, above all, its quick readiness for use and thus rapid usefulness for the customer.

SAP announced its 2Q07 earnings results in July. With 10% growth in sales to ?2.42 billion, operating margins of 23.8% and 18% growth in license sales to ?718 million, the company presented some rather convincing numbers. SAP has guided to operating margins of 26%-27% for 2007.

At Wednesday?s closing price of ?38.69 and a 2008 P/E ratio of about 20, the company?s stock still seems to enjoy a rather moderate rating. SAP enjoys a very good market position and will probably be able to further increase its market share. The sector of midsize companies offers particularly high growth potential. Here, the new "A1S" software should have a positive impact.

AC Research reiterates its "accumulate" rating on SAP.