Microsoft Reiterated as Top Pick at Morgan Stanley on Attractive Valuation
2022.07.21 22:42
Microsoft (MSFT) Reiterated as Top Pick at Morgan Stanley on Attractive Valuation
By Sam Boughedda
Microsoft (NASDAQ:MSFT) was reiterated as a top pick by a Morgan Stanley analyst in a note on Thursday. He also maintained an Overweight rating and $354 price target on the stock.
The analyst said sustained momentum in the company’s commercial cloud businesses heading into fiscal 2023 should help offset the impacts of a volatile macro environment and mounting FX headwinds.
“Heading into the quarter, investors are understandably concerned with multiple cross currents potentially impacting Microsoft’s results and outlook into FY23: PC shipment declines pressuring Windows OEM results, FX headwinds, a weakening consumer and overall macro weaknesses all serve as potential risks,” he said.
However, he noted that solid feedback on the resiliency of the commercial business from their channel conversations and another set of impressive Microsoft-specific results from their most recent CIO survey bolster their confidence in the 70% of revenues that investors focus most on to sustain Microsoft’s growth.
The analyst said heading into a “tricky Q4 print,” they narrow their focus to the three steps they believe it would take for the stock to work through earnings, including sustaining momentum in Azure growth, de-risking the outlook for FX, PCs, and a weakening consumer, and a view towards double-digit operating income growth in fiscal 2023.
