SAP stock tumbled on Monday after the German enterprise software maker slashed this year’s revenue forecast and warned that the coronavirus emergency would hurt business in the first half of 2021. The SAP (SAP) sell-off also drove down Oracle stock, its rival in database software.
The SAP announcement raised questions over SAP’s problems vs. a broader outlook for the high-growth software sector.
“In a surprise to investors, SAP went ‘all in’ on the cloud transition and canceled its analyst day,” Jefferies analyst Julian Serafini said in a note to clients.
Serafini added: “While SAP is skating to where the puck is going (or has gone), a successful transition will be long-term financially accretive. However, questions abound on the maturity of SAP’s cloud products and the pace/willingness of some of SAP’s customers to make the transition, which could result in investors awaiting proof-points prior to giving SAP’s stock credit.”
“While SAP continues to see robust interest in its solutions to drive digital transformation as customers look to emerge from the crisis with more resilience and agility, lockdowns have been recently reintroduced in some regions and demand recovery has been more muted than expected,” the company said in a written statement.
The company added: “Further and for the same reasons, SAP no longer anticipates a meaningful recovery in SAP Concur business travel-related revenues for the remainder of the year 2020.”
SAP Stock Lags Oracle In Transition To Cloud
In addition to selling database software, SAP sells business relations and customer management software. Salesforce.com (CRM) stock fell 3.4% to near 241.98 on Monday. Microsoft (MSFT) stock fell 2.8% to 210.08.
SAP said it would speed a shift to cloud computing. Oracle has moved faster to transition from on-premises database software licensing and maintenance to a subscription-based software model that taps the benefits of cloud computing.
JPMorgan on Monday cut its rating on SAP stock to neutral from overweight.
Follow Reinhardt Krause on Twitter @reinhardtk_tech for updates on 5G wireless, artificial intelligence, cybersecurity and cloud computing.
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