Consumer Interest in Microsoft's (MSFT) Windows 10 Increasing - Pacific Crest

Pacific Crest maintained an Overweight rating on Microsoft (NASDAQ: MSFT) with a price target of $55. Analyst Brendan Barnicle thinks consumer interest in Windows 10 is increasing, though sales are trending in line with expectations. Overall he continues to see Windows 10 as a potential source of upside given low consensus expectations.

"Our most recent checks with 28 PC retailers in the United States found increased consumer inquiries for Windows 10. In our survey, 28.6% of 28 retailer respondents indicated that Windows 10 inquiries were better than expected, up from 21.2% of 33 respondents in our early September survey. However, only 17.4% of 23 respondents indicated that Windows 10 was selling faster than expected, down from 22.2% of the 27 respondents in early September," said Barnicle.

The analyst added, "Our checks found little evidence of elevated inventory levels or PC sales associated with Windows 10, which contrasts to the Windows 7 launch. Consensus is modeling a 14% y/y decline for Device & Consumer revenue for FQ1 (Sept.) and a 6% decline for F2016. For C2015, consensus is modeling a 19% decline in D&C revenue, far worse than the 7.3% decline in PC sales that is currently projected by Gartner Research. Therefore, we continue to believe that Windows 10 could be a source of modest upside because of low consensus expectations."

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 $43.91 yesterday.

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