SAP: Feedback from Q3 2013 earnings conference call: fighting the cannibalisation myth
BUY, Fair Value EUR69 (+23%)
We are reiterating our Buy rating following yesterday's conference call on Q3 2013 earnings. While the share price had dropped 12% YTD before the results, we now believe SAP, which reassured on EBIT margin in a decent quarter, is at the first stage of a re-rating after showing a slight turnaround in Software sales driven by China and Brazil. We expect the second stage to stem from an acceleration in Q4 2013 with easy comps in America, while the final stage should come once SAP has proved that the business model transition to the Cloud has not prompted hefty revenue cannibalisation as the Cloud and HANA should boost core business Suite revenues.
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