Raymond James Resumes Microsoft (MSFT) at Outperform, Sees Over 25% Upside

September 30, 2022 8:24 AM EDT
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Price: $247.49 -0.04%

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Raymond James analyst Andrew Marok resumed research coverage on Microsoft (NASDAQ: MSFT) with an Outperform rating.

The price target of $300 per share implies an upside potential of just over 26% compared to yesterday’s closing price.

“Our Outperform rating and $300 price target are based on 30x MSFT’s FY23 EV/FCF, slightly below its three-year historical average, which we believe accounts for strong trends in the business slightly moderated by worries around the trajectory of enterprise IT spend if economic conditions worsen,” Marok told clients in a note.

Although Microsoft is not immune from macro headwinds and recession impacts, the analyst still considers the tech giant a relatively safe place for investors to hide.

“A recent Gartner survey indicated that 43% of CIOs intend to increase spend on IT, vs. 17% intending to decrease; that combined with the need for increased efficiency in a downturn gives us increased confidence that Microsoft can weather potential storms,” Marok added.

Another competitive advantage that Microsoft has is the ability to “invest at a scale that most other competitors in these markets cannot match.”

“We do not view investment in Azure as a standalone, rather as a multiplier for the rest of its product portfolio,” the analyst concluded.

Microsoft shares are up about 0.5% in pre-open Friday after closing at the lowest level yesterday in 18 months.

By Senad Karaahmetovic

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