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Chủ Nhật, 17 tháng 11, 2013

Barclays Ups SAP To Buy As Cloud Strategy Takes Hold - Barron's (blog)

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SAP (SAP) was trading up this afternoon, helped at least in part by a bullish nod from Barclays.

Analysts Raimo Lenschow and Gerardus Vos today upgraded the stock from Equal Weight to Overweight and raised their target price from $70 to $95. They write that the upgrade comes as they see SAP’ strategy to become a cloud vendor, parlaying its legacy on-premise apps to the cloud, is finally delivering.

This transition isn’t without risks, they note, and SAP’s core business will like remain under pressure, with high licensing volatility. That said, they write that in the near term, the company should benefit from a better macro environment and easier comps.

Read more from their note below:

Five category strategy did not work: SAP’s previous go-to-market strategy around apps, analytics, mobile, database and cloud did not resonate with customers, who tend to buy solutions to either drive down costs or support growth via innovation. Move to the Cloud: SAP has realized this and consolidated its R&D efforts to deliver a uniform technology platform. Key to this strategy is the HANA architecture, and the recently launched HANA Enterprise Cloud and HANA Cloud Platform.

Is SAP too late?: Given its dominance in legacy apps (ERP), its business network (Ariba) and differentiated HANA infrastructure, SAP is in a decent position to compete with platforms from Salesforce, Microsoft and Oracle. Attracting platform development is key and partnerships, such as that with SAS and Cloud Foundry are encouraging.

Bumpy transition: During this transition to the cloud, license will see greater volatility as SAP moves away from large license deals, also resulting in a declining core business. As new growth is likely dilutive, we expect the 35% margin target to be revised.

European vs. US perceptions: We believe there is a scarcity premium for recurring revenue models in Europe, and European investors could be willing to pay up as SAP transitions, while US investors may remain more cautious initially.

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