Microsoft Corp (NASDAQ: MSFT) has been on a year long trading high since Nadella took command. Microsoft’s stock danced around a decade high of $49.54 and low of $38.51 during the year. Prior to last year, the company traded at a little over $20.00 a share for quite some time. Whether or not the perception of Nadella’s presence warrants the rise in stock price is a debate for another time. Many of the initiatives shown over the past year are projects started many years ago under former CEO Steve Ballmer and different management heads. Regardless of who initiated and who presents it, investors see a positive future for the company.
Thanks to a Deutsche Bank rating upgrade, Microsoft’s stock just received another shot of confidence in the arm. Deutsche Bank analyst Karl Keirstead switched his ‘hold’ status on Microsoft’s stock to a ‘buy’ rating and raised the target price of Microsoft’s stock from $44 to $55. The increase comes on the heels of Keirstead’s 4-star analysis and 67% success rate regarding stock trades. The eleven dollar increase is rather significant as it takes into account a week PC market.
With several conferences and product reveals over the past 6 or so months, Microsoft is proving to investors that there is a lot more upside in Redmond’s future. According to TheStreet, analysts are particularly keen on the progress of Microsoft’s connected cloud future with Azure and Office 365. Further analysis by TheStreet's rating team falls in line with many other investors, highlighting the company’s strength in multiple areas and potential revenue growth currently outweigh its weak cash flow.
Microsoft’s earlier diversification may have outwardly looked like a stew of mismanagement and distraction to investors, and thus kept the potential of the stock low. However, with some time and proper communication, many of those earlier projects are being rebranded, repackaged and sold as competitive pieces in an ecosystem war. Perhaps Microsoft can continue to sell investors on the future of the company, but at some point, they will need a few deliveries to keep interest. Fortunately, for Microsoft, savvy investors have spoken and are putting their money on Azure and the cloud, but that doesn’t negate how they could react to Windows 10’s upcoming public reception.