DAX Index shares to watch next week: SAP, BASF, Porsche

The DAX Index's recent rally has stalled, with the index trading in a tight range ahead of critical earnings reports from major constituents. SAP, down 18% from its peak, faces an EU antitrust investigation despite robust Q2 cloud and ERP revenue growth, with its upcoming results on Tuesday. BASF, whose stock is down 20%, reported declining H1 revenue and EBITDA, a €1.3 billion cash outflow, and lowered guidance, making its next earnings crucial for assessing its turnaround. Porsche shares have fallen 32% from their high due to slowing sales and tariff exposure, with Friday's results expected to provide insight into its strategic adjustments, including a moderated EV rollout.

Analysis

The DAX Index has experienced a stalled rally, trading in a tight range, currently down from its year-to-date high of €24,635 but still up 30% from its lowest point this year. Upcoming financial results from key constituents like SAP, BASF, and Porsche next week are critical, with overall market sentiment assessed as moderately negative and uncertain.

SAP shares have plunged over 18% from their peak, facing an EU antitrust investigation that could result in fines up to 10% of global sales, despite the company offering concessions. This regulatory overhang exists alongside strong Q2 performance, where cloud backlog jumped 22% to €18.1 billion, cloud and ERP revenues rose 24% and 30% respectively, and total revenue increased 9%; the company also continues its €5 billion share repurchase program.

BASF, the world's largest chemical company, has seen its stock decline nearly 20% due to US tariffs and weakness in key markets. Its H1 revenue dropped to €33.2 billion from €33.7 billion, and EBITDA fell to €4.4 billion from €4.7 billion, accompanied by a €1.3 billion cash outflow and a lowered full-year EBITDA guidance of €7.3-€7.7 billion.

Porsche shares have crashed 32% from their highest level this year, primarily due to slowing sales in Europe and Asia, and significant exposure to US tariffs given its lack of manufacturing plants in the region. The company is implementing strategic adjustments, including moderating its electric vehicle rollout, with its upcoming results expected to provide insight into the efficacy of these measures.

Key Decisions for Investors

• Monitor SAP's upcoming earnings for further details on the regulatory investigation's progress and management's outlook, balancing strong cloud growth against potential antitrust penalties.
• Evaluate BASF's results for signs of stabilization in profitability and cash flow, given the recent revenue and EBITDA declines, cash outflow, and lowered guidance amidst challenging macroeconomic conditions.
• Assess Porsche's earnings for the impact of its strategic adjustments on sales and profitability, particularly regarding tariff mitigation and the revised EV rollout pace, which are crucial for its recovery.
• Consider the potential for these major earnings reports to break the DAX Index's current tight trading range, necessitating a review of broader portfolio positioning within the German market.