MSFT Stock: $249 Price Target By Morgan Stanley

By Amit Chowdhry ● October 29, 2020
  • Morgan Stanley analyst Keith Weiss has increased the price target of Microsoft Corporation (NASDAQ: MSFT) from $245 to $249. These are the details.

Morgan Stanley analyst Keith Weiss has increased the price target of Microsoft Corporation (NASDAQ: MSFT) from $245 to $249. And Weiss also kept an “Overweight” rating on Microsoft’s shares following the fiscal first-quarter report. 

Weiss pointed out that the first quarter results showcased an acceleration in commercial bookings and solid growth in Commercial Cloud. Plus he raised his FY 21 EPS estimates after the earnings were announced.

Fiscal First-Quarter Results

Earlier this week, Microsoft reported revenue of $37.15 billion compared to analyst expectations at under $36 billion for the first fiscal quarter. And Microsoft CFO Amy Hood said that the company is expecting between $39.5 and $40.4 billion for the fiscal second quarter. Hood noted that there will likely be software business demand for Windows licensing revenue.

For the quarter, revenue increased 12% on an annualized basis — which is down from 13% growth in the previous quarter. And revenue for commercial PCs dropped 22% due to the end of Windows 7 support and the COVID-19 pandemic. 

However, the Azure public cloud for hosting applications and websites increased by 48%. Analysts were expecting less than 45%.

And the Microsoft Intelligent Cloud unit — which features Azure, Enterprise Services, GitHub, and server products like SQL Server and Windows Server — generated $12.99 billion in revenue, up 20% year-over-year.

The Productivity and Business Processes unit — which includes Dynamics, LinkedIn, and Office — brought in $12.32 billion in revenue. Microsoft CEO Satya Nadella noted during the call that Teams (part of the Office 365 productivity app bundle) is now seeing over 115 million daily active users, up from 75 million in April.

Microsoft’s revenue from the More Personal Computing unit — which includes search ads, Surface, Windows, and Xbox –hit $11.85 billion, up 6% year-over-year. 

Even though Microsoft beat the estimates for the quarter, the stock price is trading down about 5.26% due to a broader market selloff and the guidance for the next quarter being slightly below average estimates. Analysts were expecting more than $40.4 billion for the next quarter as the company launches its next-generation video game consoles.