Wells Fargo Continues To Remain Bullish on Microsoft In Latest Note

  • Wells Fargo analyst Michael Turrin cut the price target on Microsoft Corp (NASDAQ:MSFT) to $350 from $400 and reiterated an Overweight. 
  • Turrin acknowledged the setup into Q4 is admittedly complex, with critical early indicators of a recessionary environment (inflation, rising rates, FX volatility, layoffs) becoming more evident. 
  • He saw these macro challenges could put various sub-segments of the Microsoft business at risk and curb some of its impressive recent growth.
  • However, Turrin does not think the current climate change impacts any element of Microsoft’s underlying value proposition or competitive positioning. 
  • Further, should a market downturn necessitate consolidation of IT spending across enterprises globally, he found Microsoft among the best positioned to capture incremental share gains.
  • He continued to view MSFT as well-entrenched within several significant end markets, Azure as a share gainer in the cloud IaaS wars, and MSFT shares as the cleanest way to play the continued shift of IT purchasing $s toward software and cloud.
  • He acknowledged that even Microsoft was not immune to broader macro-related factors, especially given the company’s overall exposure to various end markets of IT-related spending and global customer base.
  • However, he believed MSFT is among the best-positioned in software to weather the storm. 
  • Microsoft hosted its annual partner conference last week, featuring keynotes from CEO Satya Nadella and various business leaders. 
  • He came away from the event with increased conviction around Microsoft’s product engine, given the timely launch of Microsoft Digital Contact Center, the addition of Shared Channels in Teams, and the launch of Microsoft Cloud for Sovereignty. 
  • Price Action: MSFT shares traded lower by 0.99% at $257.79 on the last check Monday.
  • Photo by Rainer Stropek via Flickr

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