UPDATE: Goldman Sachs Upgrades Microsoft (MSFT) to Neutral
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(Updated - December 18, 2015 9:36 AM EST)
Goldman Sachs upgraded Microsoft (NASDAQ: MSFT) from Sell to Neutral with a price target of $57.00 (from $45.00). Given Microsoft's transition to cloud, analyst Heather Bellini doesn't think its multiple will compress.
"We are increasing our out year non-GAAP EPS estimates, driven primarily by faster gross margin expansion in Office 365 and Azure. While we still believe EPS consensus for FY17 and FY18 are too high, given the ongoing successful transition to the cloud we do not see the multiple coming under pressure. As such, we believe a Neutral rating is more appropriate," said Bellini.
The analyst added, "We see the following positive fundamental catalysts in 2016: (1) Continued successful transition to the cloud. (2) Despite gross margin pressure, gross profit dollars can continue to grow. (3) Positive non-GAAP EPS growth should serve as a near term catalyst. (4) Moving past multiple headwinds (over a year past the XP refresh benefit, with Office 365 making up for the decline in traditional Office). (5) We expect accelerating growth in dividend."
Shares of Microsoft closed at $55.70 yesterday.
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Create E-mail Alert Related CategoriesAnalyst Comments, Analyst EPS View, Analyst PT Change, Hot Upgrades, Upgrades
Related EntitiesGoldman Sachs, Heather Bellini
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