Citizens Downgrades SAP SE (SAP) After CRB Growth Slows to Nine-Quarter Low

SAP SE (NYSE:SAP) is one of the 10 AI Stocks Making Waves on Wall Street. On January 30, Citizens analyst Patrick Walravens downgraded the stock from Market Outperform to Market Perform after CRB slowed to lowest rate in 9 quarters. Macro-driven uncertainties further pushed the firm to take a step back from its bullish view.

The rating downgrade follows the company’s disappointing fourth-quarter results. SAP reported “disappointing top-line results” with non-IFRS earnings per share of €1.62, exceeding consensus estimates of €1.51, and operating profit of €2.83 billion, higher than the expected €2.75 billion.

Even though it beat bottom-line expectations, its total revenue of €9.68 billion fell short of the €9.75 billion consensus. Meanwhile, cloud revenue reached €5.61 billion, missing the anticipated €5.64 billion.

Citizens noted that the most important has been current cloud backlog (CRB) growth, which slowed to 25% in constant currency, missing expectations and marking the slowest growth rate in nine quarters.

SAP said the significant slowdown was due to a deal mix weighted to “larger transformations, many of which include longer ramp periods or flexible structuring,” and “mounting geopolitical tensions [which] have led to many customers putting even more emphasis on exploring Sovereign SaaS options.”

All of this has left the stock “down ~15% on Thursday and down ~18% year to date, versus an increase of ~2% for the Russell 3000 and ~2% for the S&P 500.”

SAP SE (NYSE:SAP) is a leader in ERP software that leverages artificial intelligence to enhance its enterprise resource planning (ERP) solutions.

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Disclosure: None. This article is originally published at Insider Monkey.