Raymond James Reiterates Market Perform on Microsoft Ahead of FQ14 Earnings Release Next Week

In a report published Friday, Raymond James analyst Michael Turits reiterated a Market Perform rating on

. In the report, Raymond James noted, “We reiterate our Market Perform rating ahead of Microsoft's F1Q14 earnings release on Thursday, Oct. 24.. We are further lowering our estimates given the near-term impact of Microsoft's continued shift to a first-party devices and cloud services strategy. We have also rebuilt our model to align with the company's new reporting structure disclosed at its Financial Analyst Meeting (FAM) last month. U.S.-based checks were solid, though international could be a wildcard given misses at IBM and Teradata. Gartner's estimated 8.6% decline in C3Q PC shipments was marginally better than our -11% assumption, but still well below its forecast earlier this year for a 5% decline. We continue to be positive on Microsoft's enterprise businesses, particularly its moves to cloud with Office 365 and Azure. That said, MSFT is fairly valued in our view given: a) management's doubling-down on first-party devices with the pending Nokia acquisition; b) the weak PC environment; c) lack of traction in Windows 8 (W8) and Phone 8 (WP8); and d) uncertainty around the new CEO search and potential strategy shifts.” Microsoft Corporation closed on Thursday at $34.92.