SAP downgraded to "neutral"

17.04.08 - J.P. Morgan Securities

LONDON, April 17 (newratings.com) - Analysts at JP Morgan downgrade SAP AG (SAP-EUR) from "overweight" to "neutral," while reducing their estimates for the company. The target price has been reduced from ?52 to ?37.

In a research note published this morning, the analysts mention that the deteriorating macro environment has started to have a negative impact on IT spending, with several indications in the hardware/semiconductor sector. Although SAP is likely to post its 1Q08 results in-line with the consensus, the company is likely to experience a slowdown in 2Q08, the analysts say. The adjusted EPS estimates for 2008 and 2009 have been reduced from ?1.94 to ?1.85 and from ?2.42 to ?2.28, respectively, reflecting the impact of the slowdown and adverse currency effects.