Microsoft Target Lifted as Morgan Stanley Touts Software Stocks

(Bloomberg) -- There’s new competition to be Microsoft Corp.’s biggest fan on Wall Street as Morgan Stanley lifted its price target on the stock as part of a broad, bullish call on the software sector.

“As the IT conversation shifts from pure Public Cloud towards Hybrid Cloud architectures involving enterprises utilizing a mix of on-premise and public cloud resources Microsoft pulls ahead as the best secularly position firm in tech,” analyst Keith Weiss wrote to clients.

Weiss raised his price target by $10 to $140, tying the highest among analysts surveyed by Bloomberg. He kept his overweight rating and said at current levels, “shares still undervalue Microsoft’s improved secular positioning.”

The bank named Microsoft one of its top picks for 2019, along with Palo Alto Networks and Salesforce.com. Microsoft rose 0.4 percent in pre-market trading and Salesforce climbed 1 percent as U.S. equity futures edged higher.

As part of its call, Morgan Stanley also upgraded Akamai Technologies to overweight, citing “increased confidence in stabilizing revenue and improving margins, coupled with attractive valuation levels.”

Other companies raised to overweight included New Relic, DocuSign and Tenable. Morgan Stanley cited “an increasing appreciation for the intrinsic value of a growing enterprise software subscription bases.”

On the downside, Atlassian fell 3 percent after Morgan Stanley downgraded the stock to underweight, saying “near-term upside looks limited” with the stock trading near highs.

The bank also cut its ratings to equal-weight on VMware, Oracle, Autodesk, and Nuance Communications. The four companies “are undergoing transitions or remain a work in progress,” analysts said.

To contact the reporter on this story: Ryan Vlastelica in New York at rvlastelica1@bloomberg.net

To contact the editor responsible for this story: Catherine Larkin at clarkin4@bloomberg.net

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