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SAP SE ADR SAP

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Morningstar’s Analysis

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1-Star Price

PREMIUM

5-Star Price

PREMIUM

Economic Moat

PREMIUM

Stewardship

PREMIUM

SAP to Spin Off Qualtrics and Reiterates Q2 Results In Line With Positive Preview

Julie Bhusal Sharma Equity Analyst

Analyst Note

| Julie Bhusal Sharma |

SAP reported second-quarter results that were in line with the positive preannouncement from July 8, showing relative resiliency amid the pandemic—largely due to strength in its cloud business. While second-quarter results were not a surprise given the earlier announcement, SAP revealed that it will spin off Qualtrics, the experience management software division that the company acquired less than two years ago for $8 billion. We are holding off on incorporating the spin-off in our explicit forecasts, as SAP has yet to reveal a float rate for the IPO and disclose when this will occur. However, with SAP to remain the majority shareholder in the new listing and expectations for more growth opportunities as a result, we’d expect only marginal impact to SAP’s long-term trajectory. With the outlook for 2020 upheld, we are maintaining our fair value estimate for narrow-moat SAP of EUR 106 per share and raising our estimate for U.S. shares to $124 from $119 due to exchange rates.

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Company Profile

Business Description

SAP is a global software vendor providing solutions for enterprise resource planning, database management, business intelligence, and vertical-specific software. Its flagship software products run on SAP’s HANA database technology. In fiscal 2019, the company generated roughly 44% of revenue from Europe, the Middle East, and Africa, 41% from the Americas, and 15% from Asia.

Contact
Dietmar-Hopp-Allee 16
Walldorf, 69190, Germany
T +49 6227747474
Sector Technology
Industry Software - Application
Most Recent Earnings Jun 30, 2020
Fiscal Year End Dec 31, 2020
Stock Type
Employees 101,379

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