It is not uncommon for investors to be rewarded on the stock market who have patience and do not sell stocks at the first profit warning.

SAP offers a good example of this.

As is well known, the Walldorf-based company is not only Europe's leading software group, but also the most valuable company in Germany.

Something like this obliges and increases investor demands.

Correspondingly, the shock was deep among the stock exchange traders when the Dax group conceded its medium-term goals a good year ago.

The reason for this was the effects of the corona crisis.

At the time, companies were a little more reluctant to invest in new digitization offerings.

In addition, the takeover of Concur had a significant impact.

SAP had just made the deal with the US software provider specializing in travel and expense management services at a bad time - the lockdowns prevented many business trips and reduced revenues.

The stock market honors results

Ultimately, however, the Dax group has done its homework in the past twelve months. However, a series of forecast increases and strong quarterly reports have now resulted in lost investor confidence being regained. The SAP share is still from its all-time high in ?? at around 143 removed, but with the preliminary figures for the third quarter of 2021, SAP had once again been able to advertise trust. As a reminder: In autumn 2020, the rate fell from this level by almost 40 percent to 90 euros within a few weeks.

"The shareholders can finally breathe a sigh of relief, not only thanks to the good quarterly figures, but also because of the slightly raised forecast," comments Jella Benner-Heinacher from the German Association for Protection of Securities. Above all, the SAP results in the cloud business are honored on the stock exchange. This has been the focus of the Walldorfers for years. Customers are increasingly switching to using software on the Internet. Market participants were accordingly happy to hear that the September quarter saw a significant acceleration in the growth dynamics in the cloud business. Group-wide, sales increased by 5 percent compared to the previous year. Much more important is:

Cloud revenues increased by 20 percent to 2.39 billion euros. In the full year 2021, cloud revenues are expected to increase by 16 to 19 percent to 9.4 to 9.6 billion euros. Previously, SAP had only expected a value of 9.3 to 9.5 billion euros. In addition, the forecast for currency-adjusted cloud and software revenues was raised from 23.6 to 24.0 billion euros to 23.8 to 24.2 billion euros. Adjusted for currency effects, this range corresponds to a growth rate of 2 to 4 percent. "Christian Klein's strategy seems to be working, because S4 HANA Cloud is developing into a real bestseller," said Jella Benner-Heinacher, commenting on the outlook for the Walldorf-based company. The analysts are also impressed. The cloud growth is accelerating, wrote analyst Andreas Wolf von Warburg recently, and advises buyers.Baader Bank meanwhile sees the price target at 144 euros, but also writes that the medium-term plans of the group through 2025 would continue to appear rather cautiously formulated in view of the current business development. The change in the business model towards fewer fluctuations in sales and profits is still not priced into the share price.

Currently, the forecast for the operating result by SAP is at 8.1 to 8.3 billion euros, after 7.95 to 8.25 billion euros previously.

However, this would correspond to a currency-adjusted growth rate of only 0 to minus 2 percent.

In any case, management had prepared investors for lean times on the earnings side last autumn.

The reason for this is the higher investments in the growth of the cloud business.

SAP had put the negative effect of these increased expenditures on the operating margin by 2023 compared to the earlier medium-term targets at around 4 to 5 percentage points.

In addition, the acquisitions made in recent years must be integrated.

In the medium to long term, however, the higher spending should pay off.

Fight for the top

Cloud revenues are expected to rise to more than 22 billion euros by 2025.

Group-wide sales of over 36 billion euros are expected.

However, this could still be too little to secure the top position in the promising cloud business.

The American competitor Salesforce is particularly aggressive here.

He had recently taken over the office messenger provider Slack for 28 billion dollars and set a target of sales of more than 50 billion dollars for the 2025/2026 financial year (end of January 2026).

It will be accordingly important for SAP to continue investing in the cloud area and to accompany the advancing digitization in companies.

Especially since the Corona crisis has also shown that there is plenty of potential for technology companies in this area.

SAP shareholders should be relaxed about the latest developments.

On the one hand, the DAX company has had a solid and continuous dividend policy for many years.

Aside from the dividend, investors were able to achieve a return of 13 percent per year with the Walldorf stock over the course of the decade.

If you add a bit of chart technology and look at a longer-term indicator such as the 200-day line, you will find good arguments to take a closer look at the SAP share.

The SAP share is currently quoted well above the 200-day line at 115 euros, which means the upward trend.

If this continues, the previous all-time high of 143.30 euros would also be a realistic goal, which was recently announced by various analysts.