New Analyst Calls To Drive Microsoft (MSFT)

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Analysts have now raised the price of poker for Microsoft (NASDAQ:MSFT) stock.  We have our own thoughts on this, but we still tend to view this from a value perspective.  At the start of the year 24/7 Wall St. created a $36.00 price target, but our target for this was for roughly June 30.  Microsoft closed up 9.5% on Friday at $35.03 but shares were up on massive volume of almost 300 million shares at $36.03 right after the open and even higher than that in pre-market trading.  Here is a catch up note where the other more key analysts have raised their targets based upon the earnings report:

  • Banc of America: Reiterate Buy, target raised to $40 from $35.
  • Bear Stearns: Maintained Peer Perform.
  • Citigroup: Reiterated Buy; price target raised to $41 from $36. 
  • Cowen & Co.: Maintains Outperform rating. 
  • Credit Suisse: Maintained Outperform and raised price target to $40 from $35.
  • Deutsche Bank: Reiterated Buy/Outperform, target raised to $40 from $34(or $33). 
  • Friedman Billings Ramsey (we call it FBR): maintained Outperform rating and raised price target to $40 from $38.
  • Goldman Sachs (Sarah Friar, who we gave kudos to for best in show): Maintained on Goldman’s Conviction Buy List and raised price target to $39 from $37.  FRIAR wins best in show for her call last week, particularly in light of the fact that it was immediately before the Intel earnings and we pointed out how something must be up there because of the gutsiness of that upgrade at the time.
  • Morgan Stanley: Maintained "Equal-weight" rating; $41 value.
  • Pacific Crest: Official rating raised to Outperform from Sector Perform with a new $42 price target.
  • RBC Capital: Maintained outperform rating and raised price target to $38 from $36.
  • UBS: Reiterated Buy and raised price target to $40 from $37. 

Barron’s gave its own critique with some of the quotes from a few of these reports.  It’s worth a read, because you’ll see how some analysts that are paid vast amounts and that cover the field just don’t know how to adequately recognize a trend (and a mandatory PC and software upgrade trend).  We could give a TOP 10 LIST as to why WINDOWS VISTA was going to be a guaranteed success, but we’d sound like a broken record.

Now that Microsoft has reached Multi-Year Highs, and partly on the Halo franchise getting a Halo 3 boost, 24/7 Wall St. would like to officially ask traders on Wall Street to drop the "Mister Softie" nickname for the stock.  From here on out "Master Chief" should be the stock’s nickname for traders.

We are actually covering the would be spin-off or separation of Bungie Studios for our Special Situation Investing Newsletter for our subscribers and we should have some preliminary data and opinion unique from any other research firms.

Jon C. Ogg
October 27, 2007

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