Microsoft Stock Gets $72 Target at CLSA – Investopedia

Shares of Microsoft Corporation (MSFT) ended slightly lower Tuesday, falling 0.27% even though the software giant received a strong vote of confidence by analysts at Credit Lyonnais Securities Asia (CLSA).

In a research note to clients Tuesday, analyst Ed Maguire reiterated his Outperform rating on Microsoft and bumped up his price target from $65 to $72 per share. Maguire cited Microsoft’s emergence in cloud computing as well as improving corporate demand for Windows 10. Maguire believes that both areas remain under-appreciated and could pay off for the company in the long term. (See also: Microsoft Stock Among Top Cloud Picks for 2017.)

Microsoft is the “main beneficiary” – along with Amazon,com, Inc.’s (AMZN) AWS – of the continued shift to cloud computing, Maguire wrote, according to Barron’s, “as the proportion of Global 2000 workloads in the public cloud increases from 5% to 20% in 2017-2018.”

Shares of Microsoft closed Tuesday at $62.53, down 0.27%. Based on Maguire’s $72 price target, Microsoft can still deliver roughly 15% returns from current levels. “We forecast 44% growth in recognized revenues in FY17 driven by Azure, Dynamics and Office365,” Maguire wrote. “We view Office365 as a greenfield opportunity with less than 7% of the 1.2bn global users having migrated yet to subscription.” (See also: Microsoft Launches Office 365 in 10 New Countries.)

The Redmond, Wash.-based tech giant will report fiscal second quarter 2017 earnings results next week. For the quarter that ended December, Microsoft is expected to report earnings per share of 78 cents, flat year over year, on a 1.6% decline in revenue to $25.29 billion.

Microsoft stock has a consensus Buy rating and an average analyst 12-month price target of $68.50, suggesting a 10% rise from current levels. The stock has risen 0.63% year to date, compared with a 1.3% rise in the S&P 500 (SPX) index. (See also: Is Microsoft Stock a Bargain at Tech Bubble Highs?)


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