SAP's Positive Update

SAP's Positive Update

over 3 years ago2 mins

Mentioned in story

Europe’s largest tech company, SAP, announced a better-than-expected second-quarter update, and said it’s – very gradually – getting back to business as usual 💼

What does this mean?

SAP’s update was a preliminary one, so the final numbers at the end of this month might change a little. But generally speaking, the company was pretty surefooted: its revenue last quarter was 2% higher than the same time last year, and its profit was up 7%. That suggests a faster recovery from the coronavirus slump than either SAP or its investors were expecting 🙌

SAP had previously lowered its 2020 earnings growth forecast after seeing its customers hit pause on tech spending earlier in the year. But now that a recovery seems to be on the cards, the software giant’s confirmed the earnings growth it promised at the end of its first quarter is achievable after all.

Daily Brief Image

Why should I care?

SAP’s stock rose 7% on Thursday after the company’s update, which might reflect the relief some investors are feeling that European tech firms – still firmly in their US rivals’ shadows – have seen their fortunes improve. A better-than-expected quarter, meanwhile, should result in a higher forecast for the rest of the year, all else equal 🤔 But seeing as SAP left its forecast unchanged, investors might’ve interpreted it as a textbook example of underpromising in hopes of overdelivering later on – which typically results in a stock price boost.

America’s biggest tech companies have continued their ascent this week, with the likes of Apple, Amazon, and Microsoft driving the country’s tech-heavy stock market index to record highs 📈 But that rise might not be sustainable: Deutsche Bank has warned that the speed and size of the gains don’t leave much wiggle room for another uptick when earnings reports are released later this month. JPMorgan, for its part, seems less worried: the bank reckons stocks are still attractive compared to bonds.

Daily Brief Image
Finimize

BECOME A SMARTER INVESTOR

All the daily investing news and insights you need in one subscription.

Disclaimer: These articles are provided for information purposes only. Occasionally, an opinion about whether to buy or sell a specific investment may be provided. The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment advisor.

/3 Your free quarterly content is about to expire. Uncover the biggest trends and opportunities. Subscribe now for 50%. Cancel anytime.

Finimize
© Finimize Ltd. 2023. 10328011. 280 Bishopsgate, London, EC2M 4AG