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Microsoft Has Cloud Momentum; Morgan Stanley Tacks On $5 To Price Target

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In a report published Wednesday, Morgan Stanley analyst Keith Weiss maintained an Equal-Weight rating on Microsoft Corporation (NASDAQ: MSFT), while raising its price target from $46 to $51.

Analyst Keith Weiss pointed out that Microsoft would be able to sustain its total Commercial revenue growth only if the Commercial Cloud records a CAGR of around 50 percent thru FY18. The company is targeting $20B in Commercial Cloud revenues by FY18. Weiss believes this "could prove conservative."

In the report Morgan Stanley noted, "Our June 2015 CIO survey indicated accelerating Azure adoption, w/ 31% of CIOs using today expanding to 56% in 2 years -an acceleration vs. the prior survey."

Weiss commented that the transition to the cloud was "more than just a shift," as overall spend with Microsoft appeared to be increasing. The June 2015 CIO survey indicated that 57 percent of those using or planning to use O365/Azure expected "a positive impact to overall Microsoft spend."

Weiss added that monetization had "plenty of room to go," and enterprises were estimated to spend $74 per installed business PC on Microsoft technologies, which is significantly lower user than the spend on salesforce.com, inc. (NYSE: CRM) and Adobe Systems Incorporated (NASDAQ: ADBE).

"An expanding user base, broadening set of cloud services and improving monetization all support a more bullish view on the sustainability of Cloud revenue growth. A faster shift towards the Cloud, with improving gross margins, should push multiples higher," the report stated.

Latest Ratings for MSFT

DateFirmActionFromTo
Nov 2017UBSMaintainsBuy
Oct 2017OppenheimerMaintainsOutperform
Oct 2017ArgusUpgradesHoldBuy

View More Analyst Ratings for MSFT
View the Latest Analyst Ratings

Posted-In: Morgan StanleyAnalyst Color Price Target Reiteration Analyst Ratings

 

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