Microsoft: 'underperform' rating warranted, Jefferies says
(CercleFinance.com) - An "underperform" rating on Microsoft remains warranted due to the shares' over-valuation, Jefferies analysts said in a note on Tuesday.
After taking a "fresh look" at the software giant, the US brokerage firm also cited "too much market optimism" around cloud computing platform Azure, and unsustainably high free cash flow (FCF) growth from Windows, maintaining a target price of 90 dollars for the stock.
Jefferies believes Microsoft trades at rich multiples, and modestly cuts its estimates for 2019 and 2020, which are now below consensus.
The broker warns that if Amazon Web Services (AWS) margins contract to much lower levels over time, that could also drive Azure margins below what was modeled.
The shares of Microsoft are currently down 1.3% at 135.9 dollars in New York.
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The information and analyses distributed by Cercle Finance are only intended as decision-making support for investors. Cercle Finance's responsibility may not be entailed, either directly or indirectly following the use of such information and analyses by readers. Any non-professional investor is recommended to consult a professional advisor before making any investment decision. This indicative information in no way constitutes any invitation to sell or buy securities.
After taking a "fresh look" at the software giant, the US brokerage firm also cited "too much market optimism" around cloud computing platform Azure, and unsustainably high free cash flow (FCF) growth from Windows, maintaining a target price of 90 dollars for the stock.
Jefferies believes Microsoft trades at rich multiples, and modestly cuts its estimates for 2019 and 2020, which are now below consensus.
The broker warns that if Amazon Web Services (AWS) margins contract to much lower levels over time, that could also drive Azure margins below what was modeled.
The shares of Microsoft are currently down 1.3% at 135.9 dollars in New York.
Copyright (c) 2019 CercleFinance.com. All rights reserved.
The information and analyses distributed by Cercle Finance are only intended as decision-making support for investors. Cercle Finance's responsibility may not be entailed, either directly or indirectly following the use of such information and analyses by readers. Any non-professional investor is recommended to consult a professional advisor before making any investment decision. This indicative information in no way constitutes any invitation to sell or buy securities.