SAP's Durable Backlog Growth Mitigates Demand Concern, Oppenheimer Says

MT Newswires Live10-23 02:55

SAP's (SAP) durable backlog growth is mitigating demand concerns, while cloud margin pressure remains due to ramping artificial intelligence costs, Oppenheimer said in a Thursday note.

Even as the company reported better than expected Q3 results, Oppenheimer said that the quality of the beat was mixed, as acquisitions and one-time customer catch-up lifted cloud revenue, while a lower tax-rate resulted in EPS upside, according to the note.

Additionally, SAP's guidance of current cloud backlog growth for Q4 is a lightly larger deceleration from recent quarters despite an easier comparison, Oppenheimer said, adding that the revenue upside in Q3 did not result in higher operating profit or free cash flow guidance.

Oppenheimer maintained its perform rating on the company's stock.

Price: 240.21, Change: +7.48, Percent Change: +3.21

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