Shares in SAP AG (SAPG.DE) are indicated 0.5 percent higher in pre-bourse trade, according to data from the brokerage Lang & Schwarz, as Merrill Lynch upgrades it stance on the software maker to "buy" from "neutral". The upgrade is largely based on a return to the company's cost cutting policies, which have been underappreciated by the market, Merrill Lynch says in a note to clients.

"Today, we are getting more aggressive on SAP's cost cutting efforts and model relative cuts in-line with the last recession," the brokerage says.

It also says that while SAP fourth-quarter license revenue growth in 2008 will be hurt by a tough quarter it should be within the range of lowered street estimates.

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