Software giant SAP becomes Europe's most valuable public company

German firm unseats weight-loss drug maker Novo Nordisk and is now valued at around €312bn

German software developer SAP unseated Danish weight-loss drug maker Novo Nordisk as Europe’s most-valuable public company.

German software developer SAP unseated Danish weight-loss drug maker Novo Nordisk as Europe’s most-valuable public company.

Shares of SAP, which have surged as the Walldorf, Germany-based firm boosts cloud sales with a range of new artificial intelligence offerings, rose as much as 2.3% on Monday morning. They were up 0.9% at 10:57am in Frankfurt, valuing the firm at about €312bn. That tipped it past Novo Nordisk, whose shares have declined 18% this year due to disappointing trials of its next-generation weight-loss shot CagriSema.

SAP shares have risen 40% in the past year, as chief executive Christian Klein pushed to accelerate customers’ shift from traditional on-site servers to IT infrastructure on the cloud. That process has allowed the company to sell more lucrative products bundled with AI features, boosting revenue growth. SAP has offices in Ireland in Dublin and in Galway.

“SAP is proud to be recognized as Europe’s most valuable company, underscoring the critical role of technology in keeping Europe competitive on the global stage,” a spokesperson for the company said. “Our continued investment in cloud, AI, and innovation reflects our commitment to driving digital transformation and long-term growth for businesses worldwide.” 

Analysts on average estimate SAP’s sales will increase 12% this year. If achieved, that would mark the company’s fastest annual growth rate in the past decade. Operating profits are expected to accelerate by even more, following a restructuring programme announced in January 2024.

The company is also largely insulated from Europe’s economic issues thanks to its major presence in the US, its biggest market. SAP booked €2.9bn in sales in the US in the fourth quarter, or about 31% of total revenue.

SAP has been the biggest contributor to a 30% gain in the benchmark Stoxx 600 Index since the end of 2022. The stock rose more than 150% during that period and was responsible for about 8% of the index’s advance.

SAP’s growth has put it in a league of its own in Germany, Europe’s largest economy. Last year, the country’s benchmark DAX index raised the single-stock weight cap to 15% from 10% to accommodate SAP. The company’s value has eclipsed the new cap as well, and the index provider in February introduced alternative uncapped versions of the DAX to allow institutional investors to continue to track major German firms.

SAP’s steady path higher contrasts with other European blue-chip firms that have faced challenges. ASML Holding, which SAP surpassed in October, has been grappling with weak orders at some of its key clients, as well as tightening restrictions over chip equipment exports to China.

LVMH briefly held the title of Europe’s biggest listed firm in January, only for its shares to slip back as part of a broader slide in luxury-goods stocks. Novo Nordisk lost the top spot in Europe after its shares roughly halved since reaching a record high in June. The stock received another blow after Intron Health analysts downgraded their recommendation to sell from buy. 

On Monday, Novo Nordisk agreed to pay United Laboratories International Holdings as much as €1.85bn for a next-generation obesity drug, the Danish Ozempic maker’s latest move to refill its pipeline of experimental treatments.

Novo will pay Hong Kong-based United Laboratories €185m up front for the drug, which combines three different mechanisms in an effort to treat obesity as well as diabetes and other diseases, the companies said. Novo agreed to pay as much as $1.8bn if the drug reaches certain development and sales goals.

The deal comes amid growing skepticism from investors that Novo’s next-generation portfolio will be sufficient to keep it on top of the hypercompetitive market for weight loss treatments.

Bloomberg