FBR Capital Remains Bullish on Microsoft (MSFT) Ahead of Windows 10 Event
FBR Capital reiterated an Outperform rating and $53.00 price target on Microsoft (NASDAQ: MSFT) ahead of the company's Windows 10 hardware launch event in NYC. While new device launches will be key at the event, analyst Daniel Ives also expects Microsoft to give an update on progress of Windows 10 adoption and its overall cloud vision, which is at the epicenter of its longterm growth strategy.
Ives commented, "Tomorrow, October 6, we will be attending Microsoft's Windows 10 hardware launch event in NYC. With the Windows 10 platform central to Nadella's mobile and cloud vision, we expect the event to be mainly focused on new hardware/ device launches (e.g., Surface Pro 4, Lumia 950 XL, Band 2) to help propel Microsoft's market and mind share in the consumer segment. For Microsoft (and its investors), especially after ripping the Band-Aid off and writing down the failed Nokia acquisition, the Everest-like challenge for Nadella is trying to gain a foothold in the ever competitive smartphone landscape with Apple and Samsung firmly sitting on the summit. Surface has been modestly successful, and now the goal is for Microsoft to use its momentum and unified, cloud-centric Windows 10 architecture to help drive further consumer demand and ideally start to change the perception of Microsoft as a "rounding error" in the smartphone and tablet landscape. Based on our estimates, we believe that Windows 10 was installed on more than 100 million devices worldwide by the end of September, setting the stage for a transformational cloud transition for Nadella and company. We maintain our Outperform rating and $53 price target (15x our FY16 EV/FCF)."
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Shares of Microsoft closed at $45.57 yesterday.