Microsoft (MSFT) Checks 'Very Positive' - Pacific Crest

Pacific Crest maintained an Overweight rating on Microsoft (NASDAQ: MSFT) with a price target of $65. Analyst Brendan Barnicle said checks were positive, and he has increased confidence Microsoft can meet or beat consensus expectations for FQ4. He also noted limited feedback on Windows 10.

"We have spoken to Microsoft resellers and partners in the U.S., U.K., Germany and Canada, and uniformly, they are reporting accelerating sales, with particular strength in the cloud products. So, we have increased confidence that Microsoft can meet or beat consensus expectations for FQ4. However, we remain concerned that consensus does not reflect the new revenue recognition policy for Windows 10," said Barnicle.

"Consistent with checks in May, the feedback from Microsoft resellers and partners has been very positive. We have spoken to resellers in the United States, the U.K., Germany and Canada, and generally they are reporting accelerating sales, particularly for the cloud products. As is typical in FQ4 (June), Microsoft is running a series of attractive year-end promotions. When combined with the accelerating interest in Office 365 and Azure, Microsoft seems well-positioned for strong cloud results again this quarter, despite headwinds from currency. Our FQ4 revenue estimates are slightly lower than consensus of $22.1 billion, and our FQ4 EPS estimate is below consensus of $0.57," continued the analyst.

Barnicle added, "Channel feedback is still surprisingly limited on Windows 10. The channel is positive on Windows 10 because it combines the strengths of Windows 7 with the enhancement of Windows 8."

For an analyst ratings summary and ratings history on Microsoft click here. For more ratings news on Microsoft click here.

Shares of Microsoft closed at $44.15 yesterday.

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