SAP leapfrogs Novo Nordisk to become Europe’s most valuable company

Unlock the Editor’s Digest totally free

Roula Khalaf, Editor of the FT, selects her favorite tales on this weekly e-newsletter.

Software program large SAP has overtaken Danish drugmaker Novo Nordisk to become Europe’s most valuable company, within the newest milestone for Germany’s surging inventory market.

SAP shares rose 1.3 per cent in early buying and selling on Monday, lifting its market capitalisation to €313bn, simply above that of Novo Nordisk, whose shares dipped 2.5 per cent.

Shares of SAP have risen greater than 40 per cent prior to now 12 months as traders welcomed the shift of its enterprise clients to the cloud and because the group rode the wave of enthusiasm for synthetic intelligence. Features for SAP have helped energy a rally in Frankfurt’s blue-chip Dax index that has seen it outperform most of the world’s main inventory markets.

Novo Nordisk has misplaced half its market worth since final summer time because it struggles to persuade traders that it has an enormous follow-up to its blockbuster GLP-1 anti-obesity medicine.

“Novo has been a sizzling inventory prior to now however what we’re seeing now’s that the hype has come down. On the identical time, SAP is benefiting lots from inflows into German equities,” stated Emmanuel Cau, an analyst at Barclays.

SAP final 12 months changed Dutch semiconductor tools producer ASML as Europe’s largest know-how company.

Primarily based within the city of Walldorf in south-west Germany, SAP now makes up a much bigger proportion of the German index than the nation’s historic automotive sector, which incorporates Volkswagen and Mercedes-Benz.

SAP’s weighting within the Dax has repeatedly breached a 15 per cent cap, prompting Deutsche Börse to introduce a brand new uncapped model of the index final month.

Based by 5 former IBM staff in 1972, SAP has in recent times made progress in shifting its mannequin away from promoting on-premise software program licences in the direction of cloud service contracts, a extra predictable and profitable enterprise.

Analysts anticipate SAP’s cloud income to develop 29 per cent this 12 months, whereas general income is forecast to develop 13 per cent to €38.5bn.

Analysts have additionally highlighted the potential of a brand new product that SAP unveiled final month, which permits clients to join their knowledge with third-party knowledge and analyse them via AI-powered brokers.

Though the company’s shares are down about 10 per cent from final month’s all-time excessive, its rivals for the place of most valuable company have fallen extra sharply.

Novo Nordisk, which has vied with French luxurious group LVMH for Europe’s prime spot over the previous two years, this month printed a second set of worse than anticipated trial outcomes for CagriSema, a possible successor therapy to Ozempic and Wegovy. 

Novo’s unsure product pipeline has sophisticated successful story that noticed gross sales of its present weight problems medicine surge greater than 50 per cent final 12 months.