Microsoft (MSFT) PT Raised to $65 at FBN Securities Following Solid Q4
FBN Securities analyst Shebly Seyrafi raised its price target on Microsoft (NASDAQ: MSFT) to $65.00 (from $55.00) following strong Q4 results. The firm maintained a Outperform rating.
Seyrafi commented, " We retain our Outperform rating and raise our PT from $55 to $65. The company continues to grow well in the cloud, with Azure revenue up 109% Y/Y at CC and Office 365 Commercial revenue up 59% Y/Y at CC. We currently estimate Azure at ~3% of revenue, but we estimate that Office 365 Commercial revenue is ~10% of revenue, up from ~7% of revenue the year before. This led to total Commercial Cloud (Azure, Office 365 Commercial, and Dynamics) revenue of ~3.025B ($12.1B run rate disclosed), which would be ~13% of revenue (up from ~5% at the beginning of F2015). Moreover, MSFT is targeting a $20B Commercial Cloud run rate in F2018, so if we assume that it hits around that number in FQ4 2018, we estimate Commercial Cloud increasing to 21% of revenue. Therefore, MSFT continues to execute well on its PC-to-cloud migration story. We would also like to highlight to investors that MSFT’s FCF of $5.8B represented a 6.0% FCF yield, and even after subtracting SBC of $664 (relatively small at only 2.9% of NG revenue) the FCF yield would be ~5.4%."
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Shares of Microsoft closed at $53.09 yesterday.