HomeInvesting NewsMicrosoft Stock Has a Desirable Risk-Reward Profile “Not Represented in Share.”

Microsoft Stock Has a Desirable Risk-Reward Profile “Not Represented in Share.”

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Microsoft Stock (NASDAQ:MSFT)

Even though Microsoft’s stock has fallen almost 30% year to date, investment firm Morgan Stanley recently met with several of the company’s leaders and concluded that Microsoft stock has an appealing risk-reward profile that is not currently “reflected in [its] shares.”

Microsoft (NASDAQ:MSFT) has established an increasing solution portfolio, according to analyst Keith Weiss, who has an overweight rating and a $354 price target on the Redmond, Washington-based computer giant. Microsoft stock is in an excellent position to “sustain robust demand” and increase the opportunity for more operating leverage as the global trend of technology leaders consolidating their vendor bases continues.

According to Weiss, Microsoft stock is poised for “durable” double-digit top-line growth in commercial segments, with gross margins improving as the company works to improve efficiencies and benefits from a favorable mix shift, operating expenses decreasing as gross profit dollars increase, and the Microsoft (NASDAQ:MSFT) strong capital return program resulting in returns growing in the high teens on a compound annual basis through fiscal 2025.

The analyst also said that the hybrid cloud is helping to propel business bookings on Microsoft (NASDAQ:MSFT) Azure cloud platform.

Weiss said that Microsoft’s (NASDAQ:MSFT) “management continued to sound positive on great execution against its cloud possibilities” as chief information officers aim to consolidate spending with fewer partners.

Weiss warned that the PC market downturn might hurt Microsoft (NASDAQ:MSFT) but said that this was only a temporary problem and that Windows’ long-term growth trajectory was projected to be “solid.”

Weiss revised his outlook for Windows OEM sales in the first quarter downward from an original projection of an 8% year-over-year fall to a 12.5% drop, saying that because of the focus on commercial and high-end PCs, it should be robust but not immune to the slowdown in the PC industry.

The analyst also reported that Microsoft’s (NASDAQ:MSFT) management is optimistic about the company’s gaming future but must prioritize the forthcoming in-depth assessments from authorities in the United Kingdom and Europe on the acquisition of Activision Blizzard (NASDAQ:ATVI).

Growth in subscriptions to the company’s Game Pass service and the ongoing success of Office 365 should also be beneficial.

This month, Microsoft stock increased its quarterly dividend by 10% to 68 cents per share.

Featured Image-  Megapixl @ Robert309

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