Pacific Crest Releases a Buy Rating on Microsoft Corp

By Austin Angelo

In a report released yesterday, Brent Bracelin from Pacific Crest reiterated a Buy rating on Microsoft Corp (NASDAQ: MSFT), with a price target of $70. The company’s shares closed yesterday at $65.04.

Bracelin observed:

“We expect another solid earnings report on April 24. Tailwinds should position Microsoft for the highest revenue growth in two years (7% y/y) and the fourth straight quarter of double-digit growth in FCF. We expect Microsoft’s cloud strategy to come into full bloom at the Build user conference in Seattle on May 10. We remain confident in MSFT as a core Overweight holding. MSFT poised to deliver the highest revenue growth in two years. Several tailwinds should position Microsoft for an acceleration in revenue growth during FQ3 (March). These include (1) robust commercial cloud growth in excess of 40% y/y, (2) the second consecutive quarter of growth in Windows OEM driven by the Win10 commercial refresh cycle, and (3) a full-quarter benefit of LinkedIn that could boost overall revenue growth by ~400 basis points from last year. Commercial cloud remains the key growth engine. Commercial cloud should increase by at least 40% this quarter, exceeding a $14.3 billion annual run-rate. The cloud gross margin will be more dependent on the mix of large deals but could remain in the high-40% range despite Azure price cuts. Microsoft appears comfortably on track to reach its goal of growing its cloud segment to a $20 billion run-rate in 2018.”

According to TipRanks.com, Bracelin is a 4-star analyst with an average return of 5.2% and a 58.3% success rate. Bracelin covers the Technology sector, focusing on stocks such as Cornerstone Ondemand, Riverbed Technology, and Tyler Technologies.

Currently, the analyst consensus on Microsoft Corp is Moderate Buy and the average price target is $70.38, representing an 8.2% upside.

In a report issued on April 12, RBC Capital also reiterated a Buy rating on the stock with a $72 price target.

Based on the recent corporate insider activity of 90 insiders, corporate insider sentiment is negative on the stock. Most recently, in February 2017, Mason Morfit, a Director at MSFT sold 4,616,000 shares for a total of $297,282,320.

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