Stock Update (NASDAQ:MSFT): Microsoft: No, PCs, Cloud Won’t Harm Margins, Says Morgan Stanley

[at] – Morgan Stanley’s Keith Weiss today reiterates an Overweight rating on shares of Microsoft (MSFT), and a $66 price target, writing that earnings through 2018 will get a lift from the company’s “increasing utilization” in its Azure cloud service. Microsoft is due to report earnings next on April 21st, after market close. Notes Weiss, “We’ve seen a high level of investor debate around the gross margin durability at Microsoft.” That’s as a result of two factors, “more swiftly declining PC units” and a “more quickly ramping cloud businesses.” In stark contrast to a negative piece about profit earlier today from Citigroup’s Walter Pritchard, Weiss is positive that the company’s recent margin contraction “is in Microsoft’s rear view mirror.” Weiss performs what he calls stress tests to see what would happen to Microsoft’s margins. Read more on this. Microsoft Corporation (MSFT) , currently valued at $432.24B, started trading this morning at $54.37. Looking at the stock, its one day range is $53.76 to $54.78 with the price of the stock fluctuating between $39.72 to $56.85 over the last 52 weeks. MSFT shares are currently priced at 19.75x this year’s forecasted earnings, which makes them relatively inexpensive compared to the industry’s 20.83x earnings multiple for the same period. The company pays shareholders $1.44 per share annually in dividends, yielding 2.65%. According to a consensus of 29 analysts, the earnings estimate of $0.64 per share would be $0.03 better than the year-ago quarter and a $0.04 sequential decrease. In looking at the bigger picture, the full-year EPS estimate of $2.75 would be a $0.29 improvement when compared to the previous year’s annual results. The quarterly earnings estimate is predicated on a consensus revenue forecast of $22.11 Billion. If reported, that would be a 1.75% increase over the year-ago quarter. Recently, Macquarie Initiated MSFT at Neutral (Mar 4, 2016). Previously, Morgan Stanley upgraded MSFT from Equal-Weight to Overweight. Given all the information above, we should disclose to readers that the average price target is $58.80, which is 8.15% above than it opened this morning. See more in (NASDAQ:MSFT) Similar Articles: Stock Update: Microsoft Corporation (NASDAQ:MSFT) – Microsoft Earnings: Cloud Growth Shines Through As PC sales Play Spoil Sports Stock Update (NASDAQ:MSFT): Microsoft’s Earnings Are All About Cloud Momentum Stock Update: Microsoft Corporation (NASDAQ:MSFT) – Analyst: 2016 will be a ‘206 area code street battle for the cloud’ and Microsoft could beat Amazon
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