LONDON (Dow Jones) - Shares of business-software maker SAP AG rallied as much as 9% in Frankfurt on Wednesday after profit rose 14% on increased U.S. business and the outlook for 2006 was stronger than expected.

SAP(SAP)reported a 14% rise in fourth-quarter net profit to 619 million euros , with revenue up 15% to 2.75 billion euros, led by 30% growth in the Americas.

The rival to Oracle Corp. (ORCL)and Microsoft Corp. (MSFT)said license sales rose 18% in the period.

It raised its worldwide market share to 62%, up two percentage points from the third quarter, and increased its U.S. market share to 47%, up three percentage points from the third quarter.

In early January, Walldorf, Germany -based SAP had already reported its software revenue and guided toward the upper end of fourth-quarter earnings per share. That guidance left analysts scrambling to lift price targets and recommendations.

Shares were recently up 8.2% at 158.89 euros, and Deutsche Bank upgraded the stock to buy from hold, while J.P. Morgan added the company to its focus list.

"We continue to believe SAP is seeing an improving IT-spending environment and is taking market share from global peers, especially Oracle," said John Segrich, an analyst for J.P. Morgan.

SAP said 2006 license sales should rise 15% to 17%, compared with 18% growth last year, and predicted that proforma earnings per share this year would rise 16% to 20%.

The earnings range of 5.80 euros to 6 euros a share topped the 5.74 euros predicted by analysts surveyed by Thomson First Call. According to a J. P. Morgan research note, analysts were expecting license-sales growth of just 12% for this year.

SAP also said that operating margins should rise half a percentage point to one percentage point in 2006.

A change in revenue mix and hiring only 3,500 people, rather than the 4,500 it had previously hinted at, will lift margins, added Toby McCullagh, an analyst at Bear Stearns.

SAP is evaluating opportunities to increase its buy-back activities in 2006 after buying 417 million euros of shares in 2005.

Deutsche Bank, in making the upgrade, noted that the better 2006 guidance is particularly impressive since two key products, one that integrates with Microsoft Office and a full suite of applications for its Business Process Platform, won't be fully available until 2007.

Merrill Lynch analyst Raimo Lenschow made a similar point.

"If it can already accelerate license growth and show better operating leverage than expected in the year before the launch, then the outlook for 2007 looks very interesting," Lenschow told clients. (END) Dow Jones Newswires 01-25-06 0516ET Copyright (c) 2006 Dow Jones & Company, Inc.