Microsoft (MSFT) Restructuring Could Support Rally, Says Morgan Stanley

June 26, 2013 10:00 AM EDT
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Morgan Stanley today maintained an Overweight rating on Microsoft (NASDAQ: MSFT) and raised its price target to $40.00 (from $36.00). Analyst Keith Weiss thinks shares have more room to run as PCs continue to stabilize. He also thinks a potential restructuring could unlock value.

"While we believe there is a strong investment case around stabilization of the PC market, a better cloud story and continued execution in the non-PC businesses, we do believe that an org restructuring and/or a more formal capital allocation plan may be in the works, which could further boost MSFT's multiple expansion," said Weiss.

"We think it could be likely that Microsoft realigns the business into broader buckets that better address the integration among groups of products—which means some executives may take on larger roles while other executives may depart, as is common with major reorganizations. We think this change would be received favorably by investors because it represents a shift towards a more streamlined and focused Microsoft. However, reorganizations do hold risk and are often a multi- quarter transition,” added the analyst.

For an analyst ratings summary and ratings history on Microsoft (NASDAQ: MSFT) click here. For more ratings news on Microsoft click here.

Shares of Microsoft closed at $33.67 yesterday.

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