UBS Reiterates Buy on Microsoft (MSFT) as Shares Trade up
UBS reiterated a Buy rating and $52.00 price target on Microsoft (NASDAQ: MSFT) as company shares trade up over the past 3 months. The stock has had a hard time trending out of the $40-50 range, and UBS thinks that investors are still searching for a bottom.
Analyst Brent Thill commented, "MSFT shares have traded up ~6% over the past 3 months as part of a shift in sentiment from high-beta towards lower-beta/high-quality names. The stock has had a hard time trending out of the $40-50 range, and we think investors are still searching for a bottom. Numbers have come down each of the past few qtrs., and the current debate is around whether mgmt. can switch from beat and lower to beat and raise. We don’t believe another big number cut is priced into the stock and are modeling for FQ1 rev/EPS of $21.3Bn/$0.58 vs. Street $20.8Bn/$0.59 (details in body). MSFT also recently announced a change in financial reporting structure to better align investors with how mgmt. looks at the company as well as a wave of new products meant to advance the W10 vision. In our view, mgmt. has done an excellent job articulating the vision and focusing the business during the transition. Microsoft remains one of our favorite value stories, but we acknowledge some NT hurdles (inc. a tough Q1 comp, which gets easier in 2H) still need to be cleared for investors."
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Shares of Microsoft closed at $47.11 yesterday.