William Blair upgraded Microsoft (NASDAQ: MSFT) from Market Perform to Outperform.

Analyst Jason Ader commented, "We are upgrading the shares of Microsoft to Outperform from Market Perform following another strong print. Our rationale is based on increasing confidence in Microsoft's long-term position in the cloud, which we believe will fuel IT wallet share gain for Microsoft in coming years. Looking back on our initiation report from July 18, 2016, we believe we underestimated both the net impact of cloud revenue growth on the overall business and the cloud gross margin trajectory. Our field checks indicate that Microsoft is increasingly seen as a trusted partner who will help enterprise customers transition to the cloud, and we are still in the early innings of that transition. On valuation, we believe investors will continue to re-rate Microsoft's multiple higher (current multiple of 15 times enterprise-value-to- free-cash-flow on fiscal 2018), given accelerating top-line growth and a stable to improving margin profile (driven mainly by improvements in cloud margins)."

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Shares of Microsoft closed at $57.25 yesterday.