Jefferies Initiates Coverage On Microsoft

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Late Thursday, analysts at Jefferies initiated coverage on Microsoft Corporation MSFT with an Underperform rating and $40 price target.

John DiFucci stated, “MSFT shares have rallied sharply over the past year driven by expectations for improved operational performance due to new management and the influence of activist shareholders. However, we believe the underlying issues are more related to challenging fundamentals that persist today. We believe the “new” Microsoft will look very much like the “old” Microsoft for some time.”

DiFucci also finds that Microsoft will be hard pressed to benefit from PC demand given its low cost tablets and chromebooks.

Jefferies analysts believe that cost cutting will help Microsoft, but the company’s position in mobile is still challenged.

“Management's cost cutting announcement from July 14 mitigates some of the concern of sustainability of margins. However, view do not Microsoft’s positioning in mobile as viable over the long-term, despite oft-quoted needs for a third mobile ecosystem after Apple and Android.”

Shares of Microsoft closed Thursday’s session at $48.70, up 1 percent.

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Posted In: Analyst ColorPrice TargetInitiationAnalyst RatingsJefferiesJohn DiFucci
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