“The central tenet of our investment thesis and $80 price target is the belief that Microsoft’s fast-growing Cloud businesses will lead to accelerated revenue and gross profit growth through FY19. We model a Cloud revenue CAGR of 33% through FY19 (which we define as revenue from Azure, Office 365 (commercial + consumer), LinkedIn and a portion of the Dynamics franchise) with Cloud going from 11.5% to 30.6% of Total Revenue while at the same time Cloud Revenue gross margins expand from 42% to 60%.”
The basic math Microsoft potentially generating more revenue at higher gross margins for increased profits isn’t lost the rest of the industry as well. It seems of the 36 analysts who know Microsoft stock, 26 of continue to rate the stock as a buy with a median price target of $68. While a Morgan Stanley analyst believes Microsoft can reach as high as $74 over the course of next year’s 12-months, it seems only Zukin and his potential client base will be aiming for the stars next year with Microsoft’s stock.
Whatever the outcome becomes of Microsoft’s stock next year, it’s interesting to see how the company maneuvers its new found stock appeal,
