SAP 'Readying For The Trade Reversal From A Better Fundamental Story In 2015,' According To Oppenheimer

Oppenheimer analysts recently had the opportunity to meet with SAP SE’s SAP CEO Bill McDermott and IR Head Stefan Gruber. According to a report published Thursday, “no new material information was discussed.” However, the analysts “came away feeling incrementally more confident that the vision, strategy, messaging, and guidance are better aligned this year, but this is not being reflected in the stock given investors' continued concerns regarding execution consistency, cloud model transition risks, and Concur deal.”

The firm reiterated an Outperform rating, accompanied by an $80 price target on the stock. SAP’s shares are down about 2.3 percent on Friday, to $67.13.

Related Link: Shooting For The Sky: SAP's Big Plan For The Cloud

According to the report, “the Street is overlooking that SAP's execution and fundamental story should get better this year, enabled by a recently re-energized product portfolio (core Business Suite, HANA, Concur/Fieldglass, CRM/Commerce) that favorably positions SAP to better monetize on its large installed base and show improving software business trends.”

Moreover, as the downward selling pressures “appear arrested,” the analysts believe “the stage is set for a trade reversal especially on the heels of an improving execution and fundamental story in 2015.”

The research firm is also positive on new software opportunities -- like the S4 HANA update, and new product cycles (across every operating segment), which should drive revenue growth and consensus expectations this year. Other catalysts named are: “low international penetration to cross-sell newer cloud apps, (…) higher ARPU from customers migrating to the cloud,” and less distractions from M&A activity.