NEW YORK (TheStreet) -- Microsoft Corp. (MSFT) - Get Report shares are advancing by 0.72% to $56.10 in pre-market trading on Friday, after the technology company was upgraded to "neutral" from "sell" and its price target raised to $57 from $45 at Goldman Sachs today.
"Despite our year estimates consistently compressing, we failed to appreciate that the stock would disconnect from downward EPS revisions, and the significant upward rerating of the multiple driven by Microsoft's transition to the cloud (Office 365 and Azure)," analysts said.
Other catalysts include gross profit dollars overcoming gross margin pressure and accelerating growth in dividend, according to the firm's note.
However, one risk is the pace of cloud transition, the note continued.
Based in Redmond, WA, Microsoft develops, licenses, and supports software products, services, and devices worldwide.
Recently, TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author. TheStreet Ratings has this to say about the recommendation:
We rate MICROSOFT CORP as a Buy with a ratings score of A. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its solid stock price performance, increase in net income, reasonable valuation levels, expanding profit margins and good cash flow from operations. Although the company may harbor some minor weaknesses, we feel they are unlikely to have a significant impact on results.
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The stock has not only risen over the past year, it has done so at a faster pace than the S&P 500, reflecting the earnings growth and other positive factors similar to those we have cited here. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
- The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and the Software industry average. The net income increased by 1.8% when compared to the same quarter one year prior, going from $4,540.00 million to $4,620.00 million.
- The gross profit margin for MICROSOFT CORP is currently very high, coming in at 71.80%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 22.67% is above that of the industry average.
- Net operating cash flow has slightly increased to $8,594.00 million or 2.87% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -8.37%.
- You can view the full analysis from the report here: MSFT