Morgan Stanley analyst Keith Weiss reiterated a Buy rating on Microsoft (MSFT) stock and raised his price target from $582 to $625. The 5-star analyst assigned a “Top Pick” status to MSFT stock in the large-cap software space, replacing Atlassian (TEAM). Weiss stated that Microsoft stock has “the clearest and highest probability positive risk/reward” in the large-cap software category.
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Top Morgan Stanley Analyst Sees More Upside in MSFT Stock
Weiss’ revised price target for Microsoft stock indicates 23.3% upside potential from current levels. MSFT stock has risen more than 20% year-to-date. The top-rated analyst highlighted Microsoft’s strong positioning, supported by several secular growth drivers, including generative AI, with polls revealing that it is the biggest wallet share gainer. Weiss also cited the strength in the migration of enterprise workloads to the public cloud and Microsoft’s dominant position in cybersecurity (the largest vendor in the space with more than $40 billion in revenues) as its advantages.
The analyst contends that the market is underappreciating the durability of Microsoft’s high-teens total return profile. He believes that MSFT stock is currently undervalued, trading at a multiple of less than 26x GAAP 2027 EPS compared to the average multiple of 32x non-GAAP EPS for large-cap software companies.
While Weiss understands the concerns around Microsoft due to OpenAI’s deal with Oracle (ORCL), he thinks that this contract perhaps indicates MSFT’s capacity constraints and its preference for offering services to a higher-margin enterprise customer. Furthermore, the analyst argued that Azure’s growth acceleration is not only dependent on OpenAI but is also driven by broader products and customers.
Keith Weiss is ranked No. 295 among more than 10,000 analysts on TipRanks. He has a success rate of 64%, with an average return per rating of 13.1% over a one-year period.
Is Microsoft Stock a Buy, Hold, or Sell?
With 33 Buys and just one Hold recommendation, Wall Street has a Strong Buy consensus rating on Microsoft stock. The average MSFT stock price target of $626.88 indicates 23.6% upside potential.
