Microsoft Corporation (NASDAQ:MSFT) has received a big upgrade from analysts at Jefferies. They’ve upgraded the stock from Hold to Buy and increased their price target from $33 to $42 per share. The analysts named several reasons for their upgrade, most of which are related to the big changes underway at the technology company.

Microsoft

Microsoft adopts new operating structure, seeks CEO

Two of the biggest changes which are underway at Microsoft Corporation (NASDAQ:MSFT) right now are the organizational restructure and the search for a new CEO. Jefferies analysts Ross MacMillan, Aashiv Shah and Steven O’Brien believe both will bring positive things for the company. They believe the Commercial “BestCo” versus Devices and Consumer “OtherCo” offers greater transparency on Microsoft’s key assets. They said it also offers a framework for better streamlining of the company’s portfolio.

They see great potential for a stronger portfolio focus and better capital allocation under a new CEO. Of course they admit that there is some risk in connection with Microsoft’s choice, but they believe the right CEO will be able to “drive incremental value for shareholders.”

Further upside for Microsoft

The Jefferies analysts also see potential for more upside at Microsoft Corporation (NASDAQ:MSFT), specifically in connection with Windows because of Intel Corporation (NASDAQ:INTC)’s increasing competitiveness. They agree that Windows appears to be in decline, but they say Intel’s better position in lower power and less expensive microprocessor units could offer upside to their assumptions.

They also see positives in Microsoft’s push toward cloud services with Office 365 and Azure. They see “a powerful opportunity” to drive more value per consumer with this cloud push, which raises their “conviction” regarding Office’s value. They note that it’s still the early days for Azure, but they think it’s quickly taking second place in infrastructure or platform as a service.

They also note that Microsoft Corporation (NASDAQ:MSFT)’s intellectual property is increasing in value thanks to the royalties it gets on Android devices. Because of the growth in the Android ecosystem, they see this patent portfolio as being worth about $3 to $4 per share, essentially offsetting Bing’s losses.