Morgan Stanley analyst Keith Weiss’ top pick for next year is Microsoft . Weiss has an overweight rating on the software giant’s shares. He also boosted his price target on the stock to $260 from $249.
“With tough near-term comparisons already in consensus estimates, and the multiple having pulled back to 26 times [estimated] 2022 calendar year EPS, we see potential for outperformance in fiscal year 2021 [ending June 30],” Weiss wrote in a commentary. He thinks that the durability of growth and margin expansion are underappreciated.
According to Weiss, a combination of market factors like sector rotation out of software, as well as Microsoft-specific factors have been weighing on the stock. The analyst thinks that there’s still more room for the sector rotation out of software, but “resolution in the fundamental factors should help to offset those pressures and restart momentum in the shares”.