Microsoft (MSFT) PT Raised to $495 at TD Cowen
TD Cowen analyst J. Derrick Wood raised the price target on Microsoft (NASDAQ: MSFT) to $495.00 (from $470.00) while maintaining a Buy rating.
The analyst comments "Office 365 Commercial: We model 14% cc growth (vs. 15% cc last qtr) and expect MSFT to deliver an in-line qtr. While vendor consolidation and ARPU growth via upgrades remain attractive tailwinds, we think seat growth will continue to moderate and our industry conversations on Copilot adoption remain mixed. Per the latter, we think there's still pushback on price points & wouldn't be surprised to see some packaging changes to help drive more adoption. This said, we remain comfortable w/ our assumption of 1% growth tailwind from Copilot in our FY25 Office ests. Windows: Our checks point to stabilized PC demand & we see an in-line/upside qtr with our 4% cc growth est (vs. 11% last qtr). INTC expects ~3% PC growth in CY24, inc. >40m AI PCs to be shipped. MSFT's release of AI enabled PCs/tablets in mid-June offers a small tailwind this qtr and larger tailwind in 2HCY24, noting AI PCs carry a 5-10% ASP premium. Overall: We model rev growth of 16% cc (Street at 15%) & op margin of 42.7% (Street at 42.7%), and we expect continued beat & raise momentum on strong Azure AI/core demand, easier comps and conservative margin guide. Shares trade at a ~32x CY25E P/E and we see upside to numbers to continue to drive shares higher. PT to $495 (~35x CY25E P/E)."