FBR Capital Upgrades Microsoft (MSFT) to Outperform; Citing Cloud Growth Prospects and New CEO Nadella
- Market Wrap: Adv. Q3 GDP Outpaces; Citi Lowers Q3 Results; Starbucks Percolates in Q3
- Starbucks Coffee (SBUX) Reports In-Line Q4 EPS
- Citigroup (C) Adjusts Q3 Results Lower
- After-Hours Stock Movers 10/30: (MELI) (GPRO) (AXTI) Higher; (AEGR) (TRMB) (TPX) (SBUX) Lower (more...)
- LinkedIn (LNKD) Tops Q3 EPS by 5c; Guides FY14 EPS Above Views
FBR Capital upgraded Microsoft (NASDAQ: MSFT) from Market Perform to Outperform with a price target of $49.00 (from $43.00) to reflect the firm's sum-of-the-parts analysis.
Analyst Daniel H. Ives cited: (1) have a high degree of confidence in Satya Nadella's plan for Microsoft's future (e.g., cloud/
mobile focus); (2) are optimistic about its strong cloud offerings (e.g., Office 365/ Azure); and (3) believe Microsoft is taking necessary steps (e.g., free Windows on mobile devices with screens under nine inches) to ensure Windows successfully makes the transition to mobile."
He added, "While the company has clearly missed opportunities to become a major player in the tablet, mobile, and search markets over the years, we believe now with Nadella at the helm, Microsoft is off to a golden start with his improved transparency and strategic focus on the mobile/cloud space. Coupled with a number of key strategic announcements Nadella has made as new CEO (Office on iPad, free Windows on certain mobile devices, Surface Pro 3, partnership with salesforce.com), we also believe Microsoft's disciplined spending leaves it poised for long-awaited growth in free cash flow (we estimate 5% year-over-year growth for FY15), representing a breath of fresh air for investors, in our view. That said, given our checks from the field and recent results (March quarter), we believe Microsoft is experiencing accelerated traction in the cloud with its core cloud Office product (e.g., Office 365) showing good subscriber momentum, while its cloud services platform (e.g., Azure) is also growing rapidly on the heels of strong secular trends (e.g., cloud buildout). In a nutshell, while its mobile strategy (e.g., Surface, Nokia) remains a "prove me" situation, we believe Microsoft’s intertwined focus with the cloud will help breathe new life into this software behemoth over the coming years."
Shares of Microsoft closed at $40.32 yesterday.
Serious News for Serious Traders! Try StreetInsider.com Premium Free!
You May Also Be Interested In
- UPDATE: Credit Suisse Downgrades Kraft Foods Group (KRFT) to Neutral
- Blue Nile (NILE) PT Lifted to $35 at RBC Capital on 'Much Better Than Feared' Q3
- Teva Pharma (TEVA) Price Target Raised to $64 at Deutsche Bank
Create E-mail Alert Related CategoriesAnalyst Comments, Analyst PT Change, Hot Upgrades, Upgrades
Sign up for StreetInsider Free!
Receive full access to all new and archived articles, unlimited portfolio tracking, e-mail alerts, custom newswires and RSS feeds - and more!