Morgan Stanley defends Microsoft and sees a “strong demand signal”. By

© Reuters.

By Senad Karaahmetovic

The analysts of Morgan Stanley (NYSE:) reiterated an “Overweight” rating on Microsoft (NASDAQ:) stock and a price target of $307 per share. stock.

Despite recent investor concerns that forecast numbers are still too high, analysts continue to see a strong (and lasting) demand signal in trading activity, which should help the tech titan improve its revenue growth. business and net income in the second half of next year.

“With a strong competitive position and large secular growth opportunities, the company seeks to maintain current investments to capture market share, secure a greater share of IT budgets as companies seek to consolidate suppliers, and maintain a long-term strategic positioning rather than more aggressive cuts for to optimize profitability in the near term. We broadly agree with this strategy,” they wrote to clients in a note.

Analysts also said the trading business is more sustainable than investors think. They highlighted 4 reasons why they remain bullish on Microsoft stock.

Demand signals remain positive;
Operating costs are expected to normalize in the second half of FY23;
Several revenue tailwinds towards 2HFY23; and
The valuation remains positive.
At valuation, analysts note that Microsoft trades at ~20x CY24 fiscal year GAAP earnings. This, along with accelerating EPS growth, should drive investors back to Microsoft shares, they conclude.

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