SAP shares jump as cloud strength drives beat and raise performance in Q3

Investing.com -- SAP raised its full-year guidance Monday after fiscal third-quarter results beat analyst expectations on both the top and bottom lines, driven by jump in cloud revenue.

SAP raises its 2024 outlook adjusted operating profit to between €7.8 billion and €8.0B, up from prior guidance of €7.6B to €7.9B. The stronger guidance was supported by expectations for larger cloud and software revenue.

The company now sees cloud and software revenue in a range of €29.5B to €29.8B up 10% to 11% from a year earlier and up from a prior forecast range of €29.0B to €29.5B.

SAP SE ADR (NYSE:SAP) rose around 5% in premarket trading Tuesday. 

For the three months ended Sept. 30, SAP reported adjusted earnings of €1.23 per share on revenue of €8.47B, beating the consensus estimates of €1.06 per share and €8.63B, respectively. 

Cloud revenue jumped 25% to €4.35B in Q3 year on year.

"Given the strength of momentum, we expect the results to be well received, although cautionary macro comments and a reminder of tough 4Q comps will likely temper some of the enthusiasm," Jefferies analysts said in a post-earnings note.

Meanwhile, analysts at JMP Securities raised their SAP price target after the report from $245 to $300.

The firm said it continues "to view SAP as an attractive opportunity for long-term capital appreciation," citing its successful growth strategy, a very large total addressable market (TAM) that could reach $670 billion in 2025, progress in SAP Business AI, and "an ambition to continue accelerating the business through 2027."

Yasin Ebrahim contributed to this report.