On Thursday, CMB International Securities began coverage on Microsoft Corporation (NASDAQ:MSFT), issuing a Buy rating with a price target (PT) of $473.60. The firm's analysts highlighted Microsoft's strong position in the artificial intelligence (AI) sector, particularly noting its comprehensive product range and strategic partnership with OpenAI.
CMB International Securities emphasized Microsoft's extensive consumer and business customer bases, which are expected to drive new business development opportunities as the generative AI wave continues to expand. The firm expressed a positive outlook on Microsoft's potential for long-term growth and market share gains across its key product portfolio with the integration of generative AI technologies.
The firm also anticipates that Microsoft will experience an increase in average revenue per user (ARPU) for its consumer products as more users adopt its AI-powered features, such as copilot. Based on a forecasted compound annual growth rate (CAGR) for revenue of 15.8% from fiscal year 2023 to 2026, CMB International Securities projects a net profit CAGR of 19.1%.
The $473.60 price target assigned to Microsoft's stock is derived from a discounted cash flow (DCF) valuation method. This valuation corresponds to 39.7x and 33.3x the firm's estimated price-to-earnings (PE) ratio for fiscal years 2024 and 2025, respectively. The initiation of coverage with a Buy rating reflects confidence in Microsoft's future performance in the tech industry, particularly within the AI space.
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