SAP ?accumulate?

13.09.07 - AC Research

LONDON, September 13 (newratings.com) - Analyst Henning Wagener of AC Research reiterates his "accumulate" rating on SAP AG (SAP).

According to AC Research?s research note dated September 12 and published this morning, the company plans to acquire the SAP Arabia software license and maintenance business. SAP Arabia is the company?s long-time exclusive partner for that region. In the course of the takeover, SAP will acquire selected assets and company values, among them all existing license and maintenance contracts with clients as well as all trademarks. Against this backdrop, the company plans to first open branch offices in Dubai and Saudi Arabia. The deal shall be finalized in 4Q07. SAP has not disclosed the financial details of the deal.

The analyst considers this as some rather good news. Through the acquisition, SAP may expand its own presence in that region and make better use of potentials through closer customer contact.

There was also some news about SAP and Oracle postponing by two weeks an important appointment with the judge in charge of the dispute on the alleged illegal Oracle software download. The postponement of the court hearing may be hinting at an imminent agreement. An out of court settlement should be considered rather positive, according to the analyst. That way, both parties may probably save themselves a tedious litigation. AC Research adds, however, that the outcome of such litigation can hardly be predicted.

At Tuesday?s closing price of ?40.67 and a 2008 P/E ratio of about 21, the company?s stock still seems to enjoy a rather moderate rating. Recently, SAP called in about 23 million of its own shares, corresponding to about 1.8% of its basic capital. This would lend upside to earnings per share going ahead. Considering the rather favourable market position, the company is expected to succeed in further expanding its own market share, the analyst mentions. In all, there is a slightly positive chances-risk ratio for an investment in the company?s stock.

AC Research reiterates its "accumulate" rating on SAP.