SAP:Preliminary FY12 results do not change the fundamental story
BUY, Fair Value EUR70 vs. EUR72 (+19%)
Yesterday afternoon SAP pre-announced FY12 revenues roughly in line with our forecasts and the consensus average, with an op. margin slightly below expectations. The share price fell 4% on the back of this news as we think some bullish investors would expect SAP to beat expectations amidst the solid Q2 FY13 results reported by Oracle three weeks ago. While we shave our ests. (-1% on sales and -3% on adj. EPS) and our DCF-derived fair value to EUR70 from EUR72, we reiterate our Buy rating as we contend this does not change the fundamental story on SAP. We are convinced the non-IFRS op. margin will increase in 2013 thanks to the take off of the Cloud business.