Microsoft Corporation (NASDAQ: MSFT) is down big this year as fears of inflation and aggressive rate hikes keep investors cautious on the big cap tech. But a Raymond James analyst says now is a suitable time to hope back into MSFT.
Microsoft stock could climb to $300 a share
On Friday, Andrew Marok resumed coverage on the Redmond-headquartered multinational with an “outperform” rating and said it has upside to $300 a share – more than a 25% premium on the current stock price.
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Our rating is based on 30x MSFT’s FY23 EV/FCF, slightly below its 3-year historical average, which accounts for strong trends in the business slightly moderated by worries around trajectory of enterprise IT spend if economic conditions worsen.
In July, the Nasdaq-listed firm reported weaker-than-expected results for its fiscal Q4. Its guidance for the full year, though, was promising.
Microsoft stock is currently down 30% for the year.
Microsoft is better positioned for a recession
In his note to clients, Marok agreed the coming recession is a headwind for Microsoft but said it was still a relatively better bet than peers.
A recent Gartner survey indicated that 43% of CIOs intend to increase spend on IT vs 17% intending to decrease. That, combined with the need for increased efficiency in a downturn gives us confidence that MSFT can weather potential storms.
He recommends buying Microsoft stock not just for Azure but the product portfolio as a whole.
The current price-to-earnings multiple on shares of the mega cap tech is well below its previous five-year average.
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