Investing.com -- SAP (ETR:SAPG) (NYSE:SAP) shares have declined 11% from their recent peak, creating what JPMorgan analysts see as an attractive buying opportunity.

The bank has placed the stock on Positive Catalyst Watch, while reiterating its Overweight rating and the December 2026 price target of €300.

JPMorgan attributes SAP’s recent weakness to broader trends in the U.S. software sector, including company-specific issues at peers such as Salesforce (NYSE:CRM), Oracle (NYSE:ORCL), and Adobe (NASDAQ:ADBE). However, analysts argue these developments have “limited read-through to SAP” and believe the sell-off is overdone.

According to the bank’s analysts, SAP remains well-positioned due to its high proportion of recurring revenue, which accounts for approximately 85% of total sales.

They see the company as a “defensive haven” in an uncertain macroeconomic environment, supported by high recurring revenue, robust idiosyncratic drivers, and a strong balance sheet, among other drivers.

SAP’s cloud backlog has also grown significantly, reaching €63 billion at the end of 2024, providing “high levels of visibility on cloud revenue,” analysts noted.

Another key driver is the company’s transition to its S/4HANA cloud platform. JPMorgan notes that SAP is still in the early stages of its migration cycle to S/4HANA, with a large portion of its installed base yet to move to the cloud.

This trend is expected to accelerate, fueled by a 2027 maintenance deadline and the shift of larger enterprise customers.

JPMorgan analysts also highlighted SAP’s margin expansion cycle. They point to the software giant’s restructuring efforts and cost discipline, which are expected to drive earnings growth in the coming years.

“SAP has managed to accelerate its top-line growth to double-digits, while keeping headcount relatively constant. This allows SAP to expand its margins at pace,” analysts led by Toby Ogg noted.

“We expect SAP to generate significant earnings growth over the coming years fuelled by revenue growth acceleration and self-help measures on the margins. We think this level of earnings growth adds a healthy cushion to SAP’s share price,” they added.

Furthermore, analysts see potential upside from SAP’s AI initiatives, particularly with the company’s upcoming Capital Markets Day in May, where SAP is expected to outline its approach to “agentic AI” use cases. This could further strengthen its AI narrative, which the firm already considers a growing factor in SAP’s investment case.

Longer-term, JPMorgan’s analysts have laid out a bullish scenario in which SAP’s revenue growth accelerates to 15% annually, potentially driving the stock to €425 per share.

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