Credit Suisse maintained an Outperform rating on Microsoft (NASDAQ: MSFT) and raised its price target of $55.00 (from $50.00). The change follows strong Q1 results.

Analyst Philip Winslow said, "Microsoft's strong hardware revenue outperformance was paired with far better-than-expected cost controls, resulting operating margin of 30.1% versus consensus of 27.6%. Additionally, Microsoft's cloud businesses continued to demonstrate momentum, as Office 365 Home users increased to 7.1 million vs. 5.6 million in FQ4 and Office 365 commercial seats grew 96% year over year, contributing to Microsoft's Commercial Cloud's revenue growth rate of 128%."

"We believe that Microsoft can return to double-digit EPS growth and that multiple options exist for Satya Nadella and Amy Hood to unlock shareholder value, including (1) rationalizing the cost structure of the company (which management is already undertaking), (2) potentially divesting/exiting underperforming/non-core businesses, (3) optimizing the capital structure (e.g., raising debt against off-shore stockpiles of cash), (4) increasing the level of buybacks/dividends, and/or (5) accelerating the shift to Office 365 (i.e., "pull a full Adobe"). If Microsoft were to enact the aforementioned financial/strategic changes, our price target could be biased at least into the $50s," he added.

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Shares of Microsoft closed at $45.02 yesterday.