CFRA Reiterates Strong Buy Rating on Microsoft (MSFT), PT $490
CFRA analyst Angelo Zino reiterated a Strong Buy rating and $490.00 price target on Microsoft (NASDAQ: MSFT)
The analyst comments "We keep our 12-month target at $490 on a P/E of 32.8x our CY 26 EPS view of $14.92. We adjust our FY 25 (Jun.) EPS to $13.01 from $12.96 and FY 26 to $14.72 from $14.87. After posting better-than-expected Dec-Q results, Mar-Q guidance was moderately below our view, hurt by a 200 basis points FX headwind and slower-than-projected acceleration in Azure (31%-32% CC vs. our 33% outlook). AI contribution in the Dec-Q was 13%-pts of Azure revenue (we expected 12%-pts), while Copilot revenue appears to be surprisingly growing faster than we anticipated, supporting both seat growth and better pricing. Despite capacity constraints, MSFT expects to be in balance by the end of the Jun-Q and plans to pivot spending back toward PP&E (more than half of cloud/AI capex currently in long-lived assets), which will allow it to better manage capex spend to AI revenue. Commercial bookings rose 67% (+75% in CC) and were significantly ahead of expectations, led by Azure commitments from OpenAI, which provides good visibility."
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Shares of Microsoft closed at $442.33 yesterday.