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Tuesday, Oct 15
Jefferies ups Microsoft to Buy
- "We think the stage is set for a series of value creating events to unfold over the next 18 months," says analyst Ross MacMIllan, upgrading Microsoft (MSFT) to Buy and lifting his price target to $42 from $33.
- Among those events is a new operating structure with greater transparency on the best assets, or what MacMillan calls "BestCo" - the commercial segment containing key assets transitioning to the cloud. "OtherCo" is the devices and consumer segment which carry less clear value. MacMillan sees the market allowing a higher valuation to the BestCo operations.
- As for the new CEO, MacMillan sees the potential for better portfolio focus - i.e. which assets should remain as core and what should be viewed as non-core - as well as someone who sees the company's massive recurring cash flows as opportunity to give more back to shareholders.
- Shares +1% premarket.