Microsoft Stock Will Come Back, Cowen Says

In a report published Friday, analysts at Cowen & Company maintained their Market Perform rating on Microsoft Corporation (NASDAQ: MSFT), as well as their price target of $49. Despite a difficult PC market, Microsoft posted its Q3 with the revenue and EPS higher than the consensus and the estimates.The company reported F3Q revenue of $21.7 billion and EPS of $0.61, significantly higher than the estimates and the consensus, despite FX negatively affecting the revenues and EPS by 300 bps each. Total bookings also grew at a healthy constant currency rate of 9 percent.Microsoft has indicated that Windows is stabilizing, with growth in activation during the quarter. In addition, Office 365 outperformed once again, with 84 percent year-on-year growth in commercial seats and the addition of more than three million new customer stubs quarter-on-quarter."The ascent of Satya Nadella to CEO has had positive returns, and he is a very skilled executive. As well, MSFT's cloud business continues to impress. Still, the big question remains whether Mr. Nadella can effect enough positive change over time at a co. that faces a number of secular questions," the analysts said.The company's impressive cost discipline has led to the lowering of the Opex guidance for FY15 to $32.4 billion-$32.5 billion, although the analysts believe that it is unrealistic to a return to the mid-30s levels seen in FY 13 anytime over the next two to three years.