HSBC Revises Price Target, Estimates for SAP After 'Mixed' Q2 Results; Buy Rating Kept

02:01 AM EDT, 07/28/2026 (MT Newswires) -- HSBC Global Investment Research updated its price target and earnings forecasts for SAP (SAP.F), noting the German software company's "mixed" second-quarter performance and its "largely maintained" full-year 2026 outlook. For the three months ended June 30, SAP reported total revenue of 9.88 billion euros, which HSBC analysts said Monday was 1.3% above their forecast and 0.4% higher than market expectations. The research firm also noted the Reltio acquisition "likely" contributed 25 basis points to reported revenue growth, while creating a 29-basis-point drag on non-GAAP operating profit. SAP also reaffirmed its 2026 constant-currency growth target of 10.6% and expectation of accelerating growth in 2027. Conversely, to account for acquisition dilution, the company trimmed its 2026 non-GAAP operating profit outlook by 100 million euros to between 11.8 billion euros and 12.2 billion euros. "The transition to cloud seems to be coming faster than we previously expected. We estimate 7-8% of SAP's on-premise customers by revenue shifted to cloud over the last 12 months vs 4.4% average in 3Q24-2Q25. The pace of transition to cloud seems to have accelerated 3Q25 onwards. We were previously assuming that unconfirmed reports of SAP extending regular on-premise support to beyond 2030e would result in a slowdown in transition to cloud. We are now [modeling] elevated transition to cloud through 2027e. As shifting to cloud results in 2-3x revenue uplift, we are slightly increasing our revenue estimates," the note said. Accordingly, analysts increased their non-GAAP EPS projections for full-year 2027 to 2030 on signs of a faster-than-expected cloud transition. Meanwhile, HSBC raised its price target to 196 euros from 185 euros amid higher midterm growth rate expectations and reiterated its buy rating on the stock.