Shares of SAP Tick Higher As Barclays Sees Company Entering 2015 With A 'Clean Slate'

Shares of

were trading higher mid-Monday afternoon following an optimistic note from analysts at Barclays in the morning. “We expect the company to enter 2015 with a clean slate and articulate new 2020 targets,” Raimo Lenschow of Barclays wrote in a note to clients. “Clarity is crucial, and organic revenue growth and margin targets for Core and Cloud could achieve this.” Lenschow believes that if SAP presents a “comprehensive, yet simple” objectives, the company could rebuild credibility. According to Lenschow's projections, Core revenues and profit can sustain a compounded annual growth rate of three percent and six percent, respectively through 2020 with margins near 50 percent. The analyst suggests the company's Core would be worth approximately 71 billion euros, roughly equivalent to the company's entire business. This may present an attractive proposition to value investors, according to Lenschow who notes that if SAP provides long-term targets, margins could hit 48 percent by 2020. However, the analyst notes that it is also possible that the company will reduce its 35 percent margins target for 2017 with a renewed focus on longer-term metrics. Bottom line, SAP shares are in “value territory” but the analyst does acknowledge the company “has a tough road ahead” until it reveals new targets and rapport is built. Shares were reiterated with an Overweight rating and $83 price target.