Microsoft: Rating, Target Raised in Anticipation of Windows 7

| About: Microsoft Corporation (MSFT)

Sentiment on Microsoft (NASDAQ:MSFT) shares continues to improve, based on anticipation of the launch of Windows 7 in October, signs of early success for Bing, and a continued focus on cost cutting. Already this week, we’ve had two Barron’s Roundtable members recommend the stock, and a table-pounding recommendation from Jefferies analyst Katherine Egbert.

Today, we get more of the same:

  • FBR Capital Markets analyst David Hilal Wednesday repeated his Outperform rating on the stock, increasing his price target to $28 from $22 “to reflect the recent stabilization of the IT spending environment and the company’s strong product pipeline.” (Not to mention the fact that you can’t sit too long with an Outperform rating and a $22 target when the stock is already at $23.45.) He notes that the company has new versions of Windows Server, Office and SQL Server coming, in addition to Windows 7. Hilal believes that adoption of the new version of the OS will “materially exceed that of Vista.” He also writes that he “encouraged” by the early progress of Bing.
  • Standard & Poor’s analyst Jim Yin Wednesday raised his rating on MSFT to Strong Buy from Buy, boosting his target price to $29, from $26. Yin writes that he expects P/E multiple expansion on MSFT shares, driven in part by the expectations for Project Natal, the company’s controller-free video game input concept. He thinks Xbox 360 sales will jump as consumer anticipate new games that use its full-body and voice control capability. “We think Project Natal is so innovative that it will take several years for competitors to catch up,” and he adds that the concept will eventually be applied to PCs.

MSFT Wednesday is up 33 cents, or 1.4%, to $23.78.

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