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Technology Stocks : SAP A.G. -- Ignore unavailable to you. Want to Upgrade?

To: deeno who wrote (3305)	9/13/1999 2:24:00 PM
From: deeno	Respond to of 3424

upgrade Price - Local / ADR: EUR425.5 / $30 5/16 12 Month Price Objective: EUR540 / US$38 1/2 Estimates (Dec) 1998A 1999E 2000E Revenue 4316.0 5012.0 6299.0 Yr/yr Growth 40.3% 16.1% 25.7% EPS 5.0 4.9 7.0 Yr/yr growth n/a -3.7% 44.2% P/E 84.4 87.7 60.8 ADR EPS $0.49 $0.43 $0.62 Cash Flow/Share 6.37 6.66 9.16 Price/Cash Flow 66.8x 63.9x 46.5 Gross Dividend 1.60 1.64 1.80 Gross Yield 1%1%1% Opinion & Financial Data Investment Opinion ? Local: C-3-1-7 to C-1-1-7 Investment Opinion ? ADR: C-3-1-7 to C-1-1-7 Mkt. Value / Shares Outstanding (mn): 44678 / 105 Book Value/Share (Dec-98): 17.38 Price/Book Ratio: 21 Est. 5 Year EPS Growth: 30% 1999E P/E Rel. to Mkt: 372 Stock Data 52-Week Range ? Local: 485.73-236.00 52-Week Range ? ADR: $0 - $0 Symbol / Exchange ? Local: SAPHF / Frankfurt Symbol / Exchange ? ADR: SAP / New York Bloomberg / Reuters: SAP3 GR / SAPG.F Shares/ADR: 0.08 Exchange Rate: EUR0.95/USD Investment Highlights: ú We are changing our intermediate term neutral rating to a buy rating due to the improved outlook for the ERP market in 2000. ú We believe investors are becoming interested in software vendors again, specifically ERP as corporations begin to show interest in buying applications post-Y2k. ú Although there is still a high risk of SAP missing the consensus estimates for 1999, we believe investors are already looking through to 2000. ú We are establishing a near term price objective of EUR 540, over a 20% increase from the current price, based on a 2001 PEG of 2. ú Using a 30% CAGR over the next five years, a P/E of 60x (PEG of 2) our 2001 estimate of EUR 9 justifies this price in a 6-9 month time frame. Bulletin