Microsoft has been assigned a Buy rating with a price target of $50 by UBS analysts following a meeting with Microsoft expert Mary Jo Foley. In their report, which was issued on Monday, the firm analyzed the stock on key points and identified upcoming challenges for the company.
Key points noted
The sell-side firm noted that Foley has been following Microsoft for more than two decades. Some of the key points they made include the fact that developers favor a hybrid strategy and that an incredible amount of new server-related offerings are to be launched during the calendar year 2016. Other key points taken were Microsoft’s Azure cloud platform, which is expanding, and the Windows 10 launch, which is expected to improve the PC experience from Windows 8.
At the end of last week, Bruce Greenwald, the founding director of the Heilbrunn Center for Graham and Dodd Investing at Columbia Business School, sat down for a Fireside Chat with Li Lu, the founder and chairman of Himalaya Capital as part of the 13th Columbia China Business Conference. The chat spanned many different topics, Read More
Microsoft has held two large-scale conferences, Build and Ignite, over the past two months. About 5,000 developers attended Build was attended, while around 23,000 IT professionals attended Ignite. Brent Thill, a UBS analyst said, “Biggest announcements from conferences were around toolkits for enabling devs to port Android/iOS code to Windows w/ minimal effort and granularity/control provided by Windows update for business.”
Upcoming challenges for Microsoft
In their note, UBS analysts argued that the recent challenges for the tech giant include the fact that there are few apps in the Windows Store, which is a major area of concern for developers. Additionally, Microsoft might be compelling customers to adopt the cloud earlier than they would like to. Another challenge that UBS talked about in its report is that partners are concerned about how the transformation to the cloud could affect their businesses.
Thill expects fiscal year 2015 earnings per share of $2.44, which is marginally higher than the consensus estimate of $2.42. Also he expects earnings per share of $2.82 in fiscal 2016, which is more than the consensus estimate of $2.78. For fiscal year 2016, the analyst is expecting the software company to earn revenue of $93.65 billion.
Microsoft has a consensus price target of $49.34 and a consensus rating of Buy. At the time of writing this article (around 10:15 Eastern), Microsoft shares were down 1.71% at $46.57, and year to date, the stock is down by over 1%.