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UBS Lowers Price Target / IBM Earnings

$SAP (+0,76%) UBS has lowered its price target for SAP from €205 to €164 but maintained its “buy” rating. Naturally, this has sent the stock price plummeting once again, whereas the occasionally positive analyst reports previously failed to garner any interest and did not trigger any significant, sustained price increases.

I’m curious to see the numbers. It’s about time management started delivering something other than fines and acquisitions, which the market tends to view as rather unnecessary.

Let’s see if the stock holds at €130 today—I’ve posted my thoughts on this stock many times before and had hoped I’d be proven wrong. It’s sad for everyone who bought at €200 or higher.

P.S.: It’s probably mainly due to today’s very poor IBM results. Do you think SAP will report better numbers?

12 Commenti

jkb92@jkb92

The decline is mainly due to the figures from $IBM; it affects the entire sector.

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Chris@IronEagle

@jkb92 You're right there, IBM—20% is pretty steep. But actually, the sector has already been punished enough. And what does IBM have to do with SAP, anyway? Their businesses only overlap to a very limited extent. Plus, IBM hit its all-time high (ATH) in June, so the pullback is steep, but from a different level. SAP is already more than 50% below its ATH.

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jkb92@jkb92

@IronEagle Think of it as an opportunity—I've put in a little more, too.

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Jan@Barrd

@IronEagle IBM said during the call that they were noticing customers were spending less money on SaaS and that AI was taking center stage. That's why. We'll see.

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Florian K.@Kauli

@Barrd Yes, but that's because customers see that memory chips are getting more and more expensive, so they'd rather make the investment now than wait any longer. So it could also be a temporary effect.

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Chris@IronEagle

@jkb92 What gives you hope? That there will be another flash in the pan like the one in early June 2026? SaaS does indeed seem to be less in demand, and that’s now reflected in the numbers (at least at IBM). SAP has a 2026 P/E ratio of (currently) 20. If the numbers turn out to be worse, we’ll be in a range that’s absolutely no longer justified given the lack of growth. I think SAP is like VW in the auto industry. Things are going wrong both for the sector and for the company itself.

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jkb92@jkb92

@IronEagle I don't think this is really optional for the average SAP customer.

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jkb92@jkb92

The market reaction actually suggests that this has more or less already been priced in and that there isn't much room left for software stocks to fall.

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jkb92@jkb92

@jkb92 Actually, we have to thank $IBM. I was able to stock up on $ACN with a discount of almost 10%.

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Chris@IronEagle

@jkb92 Do you like these "fallen angels" in the software or consulting industry? :-) Isn't the market generally driven more by momentum? This bet can pay off—as with Bayer or EON, for example—but it can also go wrong, as with auto stocks. Or you need to have the patience to hold on for the long haul and end up missing out on many other opportunities in the meantime. When SAP starts climbing again (too bad I was too hesitant to sell everything while on vacation in early June), I’ll continue to reduce my position.

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jkb92@jkb92

@IronEagle I’ve picked up a few stocks recently. I believe that AI is bringing about change, but not necessarily for the worse in every area—and certainly not to the extent suggested by the sell-off—which, in my opinion, presents good long-term opportunities. The narrative changes so quickly. Just over a year ago, no one would touch semiconductor stocks. Back then, there were apparently also “reasons” why it wasn’t a good long-term investment.

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Dividenden@Rente@userc7b02065b8a7407b

Yes, IBM has dragged down the entire software industry and once again stoked fears that all the AI investments are coming at the expense of software. Accenture, Nemetschek, Microsoft, and others have also taken a beating. I don’t currently believe that SAP’s Q2 numbers will mark a turnaround. It will probably take some time before it becomes clear where things are headed.

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