Microsoft Corporation Financial Analyst Brief: Key Takeaways

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Microsoft’s Neutral rating has been maintained, with a price target of $47, by JPMorgan analysts following the company’s Financial Analyst Briefing. JPMorgan analysts noted a few key takeaways.

Key takeaway from financial briefing

In its report, the investment banking firm noted that CEO Satya Nadella talked about the concept of “Windows-as-a-service,” wherein around 800+ million devices “are kept current free of charge” with potential post-sale revenue streams from search and PC, gaming, etc. The company told that it is looking to see Windows 10 in over a billion devices by FY 2018.

During the briefing, Microsoft underlined strong momentum in Office 365 and Dynamics, acknowledging that the transformation from licensing to cloud has added customer LTV and a very useful graph of user information that can be leveraged across the organization.

On its cloud platform, the software company stated that its Azure Active Directory is one of the most important assets. It forms the base of every Office 365 or Dynamics CRM sale, thereby creating solid information to build upon. Microsoft guided for a cloud revenue run rate at $20B by FY18, which is a 40% CAGR from FY16 to FY18.

“While the PC cycle and Windows dynamic are still highly relevant, we believe Microsoft is pushing forward with a successful cloud strategy,” the analysts stated.

Analysts’ take on Microsoft

Separately, analysts at Pacific Crest assigned an Outperform rating to the stock with a price target of $68 in a report issued on Saturday. KeyBanc analysts upgraded their price target from $50 to $55 in a research note to  investors on Thursday and assigned an Overweight rating to the stock. The Street analysts maintained their Buy rating on Microsoft in a research note to investors on April, 30. Finally, analysts at Vetr revised their outlook upward on the share and assigned a price target of $46.90 with a Hold rating, an upgrade from Sell. Presently, Microsoft has a consensus rating of Hold and an average price target of $48.38.

On Friday, Microsoft shares closed up 0.03% at $48.65, and year to date, the stock is up by over 3%.

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