CMB International Securities initiated coverage on Microsoft Corporation (NASDAQ:MSFT) today, giving it a Buy rating and setting a price target of $473.60. Analysts at the firm highlighted Microsoft’s strong position in the artificial intelligence (AI) sector, specifically mentioning its wide range of products and its partnership with OpenAI.
The firm pointed out Microsoft’s large customer bases in both the consumer and business sectors as key drivers of future growth opportunities as the generative AI industry continues to expand. They expressed optimism about Microsoft’s long-term growth potential and its ability to increase market share across its product offerings through the integration of generative AI technologies.
CMB International Securities also anticipates a boost in average revenue per user (ARPU) for Microsoft’s consumer products as more users adopt AI-powered features like copilot. They project a forecasted compound annual growth rate (CAGR) of 15.8% for revenue from fiscal year 2023 to 2026, with a net profit CAGR of 19.1%.
The $473.60 price target for Microsoft’s stock is based on a discounted cash flow (DCF) valuation method. This valuation represents 39.7x and 33.3x the estimated price-to-earnings (PE) ratio for fiscal years 2024 and 2025, respectively. The Buy rating reflects confidence in Microsoft’s future performance in the tech industry, particularly within the AI sector.
