By Barbara Kollmeyer
Shares of software giant SAP powered higher in Europe on Wednesday, lifted by a positive financial update, while equally upbeat news drove up stock in LVMH Moet Hennessey, adding to the wealth pile of the world’s third-richest person.
Among stocks on the move, SAP /zigman2/quotes/202053813/delayed XE:SAP +1.34% /zigman2/quotes/207905606/composite SAP +3.69% was a top performer, leading Europe’s tech sector higher with a gain of more than 4%. The German software group late Tuesday pre-announced better-than-expected quarterly results and lifted full-year guidance.
Analysts lauded signs of accelerating traction for SAP’s transition to cloud-based versions of its business software, as the backlog for those services grew.
“We believe that if growth levels continue to improve, investors will rerate SAP shares to account for faster-growing but somewhat undervalued cloud assets. We believe the cloud performance is also impressive given transactional products were unlikely to have accelerated much in Q3 due to the delta variant,” said Berenberg analysts Andrew DeGaspari and Alexandra Ross, in a note to clients.
“As the world recovers from the pandemic and large-scale digital transformation projects resume, we believe SAP will benefit over the next 6-12 months,” said the analysts, who rate SAP a buy.
Elsewhere, shares of LVMH Moët Hennessy Louis Vuitton /zigman2/quotes/206499835/delayed IT:LVMH +3.89% rose 2.6% after the French luxury-goods conglomerate said third-quarter sales just beat forecasts. The group, run by the third-richest man in the world, Bernard Arnault, reported sharp growth again in flagship brands Dior and Louis Vuitton. Sales in Asia and the U.S. again saw double-digit growth.
“LVMH’s 3Q21 announcement should reassure, particularly due to resilient growth in the high-margin Fashion & Leather and an improved September exit rate in Asia/China after the August slowdown,” said Citi analyst Thomas Chauvet, in a note to clients.
“The read-across to Hermès, Kering and Moncler might be positive given the F&L division’s sharp improvement in Europe led by local demand and improved exit rate in Asia. For Richemont however, there will be some caution following LVMH’s miss in Watches & Jewelry driven by jewelry rather than watches,” the analyst added.
Shares of Hermès /zigman2/quotes/200522137/delayed FR:RMS +3.94% and Moncler /zigman2/quotes/206834293/delayed IT:MONC +2.19% rose 2.2% each, while those of Kering /zigman2/quotes/204653408/delayed FR:KER +2.68% rose 1.4% and Richemont /zigman2/quotes/203783259/delayed CH:CFR +3.42% also rose 2.2%.
The Stoxx Europe 600 index /zigman2/quotes/210599654/delayed XX:SXXP +0.63% was up 0.6% to 459.87, following a nearly 1% gain on Tuesday. The German DAX /zigman2/quotes/210597999/delayed DX:DAX +0.29% rose 0.6%, the French CAC 40 /zigman2/quotes/210597958/delayed FR:PX1 +1.04% rose 0.1% and the FTSE 100 /zigman2/quotes/210598409/delayed UK:UKX +0.81% fell 0.3%. The euro /zigman2/quotes/210561242/realtime/sampled EURUSD +0.2017% rose 0.2% to $1.1535.
Data showed U.S. consumer prices rose 0.4% in September and 5.4% on an annual basis, driven by higher food, gasoline and rent prices. Investors also got a batch of the first big earnings, from JPMorgan Chase /zigman2/quotes/205971034/composite JPM +1.19% , BlackRock /zigman2/quotes/207946232/composite BLK +0.28% and Delta Airlines /zigman2/quotes/200327741/composite DAL +2.20% , which warned that high fuel prices could cut into future profit.
In Europe, data showed German consumer prices rising a strong 4.1% in September, with energy-product prices surging 14.3% compared with very low prices of the previous year. Europe’s energy crunch has driven up natural resource prices, driving more worries over those higher costs pinching growth in the region.
European and U.K. natural gas futures continued to climb on Tuesday. Russian President Vladimir Putin reportedly said at the Russian Energy Week International Forum that his country would continue to help Europe over gs supplies and denied using supplies as a ‘weapon’ .
The worst performer on the Stoxx 600 was Just Eat Takeaway.com /zigman2/quotes/201653805/delayed NL:TKWY +3.10% which fell 1.7% after it said that order growth rose 25% in the third quarter, and backed its guidance for the year. A team of analysts at Citi, led by Catherine T. O’Neill, commented that order growth fell short of expectations.
“We highlight that to reach the bottom end of management’s FY21e order and GTV [gross transaction value] guidance, we need to see a qoq increase in absolute orders and GTV in 4Q21,” Citi analysts said.