Up 29% Over The Past Month, What’s Next For SAP Stock?

SAP: SAP logo

SAP (NYSE:SAP), a market leader in enterprise application software and also one of the biggest analytics and business intelligence companies, has seen its stock rise by close to 29% over the past month (about 21 trading days). While the broader technology indices have fared well in recent weeks, following cooler-than-expected U.S. inflation data for the month of October, there are a couple of factors driving SAP stock higher.  Although SAP’s earnings for the third quarter were weaker than expected, with operating profit coming in roughly flat year-over-year at 1.24 billion euros ($1.28 billion) due to higher R&D spending and selling costs, demand is expanding despite a mixed economic environment. The company’s closely watched cloud business saw revenue expand by 38% to 3.29 billion euros ($3.41 billion), with overall revenue growing by 15% to 7.84 billion euros ($8.12 billion). SAP indicated in September that it would raise prices on maintenance of software installation to offset rising costs and this could partly help to protect margins in the current environment.

However, now that SAP stock has seen a rise of about 29% over the last month, will it continue its upward trajectory in the near term, or is a decline imminent? Based on historical data, there was only one instance in the last 10 years when SAP (SAP) stock saw a trailing 21-day rise of 29% or more. Given how unlikely such an exceptional stock price movement is, we looked at the 22 instances where SAP stock saw an unusual jump of 20% or more over a 21-day period. 11 of these instances resulted in SAP stock rising over the subsequent one-month period (21 trading days). This historical pattern reflects 11 out of 22, or about a 50% chance of rise in SAP stock over the next month. This means that a further rally in SAP stock doesn’t look very likely in the near term. See our analysis on  SAP Stock Chance of A Rise for more details.

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 Returns Nov 2022
MTD [1]
YTD [1]
Total [2]
 SAP Return 15% -21% 27%
 S&P 500 Return 3% -16% 78%
 Trefis Multi-Strategy Portfolio 8% -16% 231%
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  5. SAP’s Q1 Results Were Mixed, But The Stock Still Looks Like A Buy
  6. Should You Buy The Decline In SAP Stock?

[1] Month-to-date and year-to-date as of 11/13/2022
[2] Cumulative total returns since the end of 2016

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