The Microsoft stock sell-off is overdone, analyst says

Microsoft’s stock drop of 28% so far in 2022 amid growth concerns now looks overdone, Morgan Stanley says.

“While investors worry forward numbers have not been de-risked, we see a strong (and durable) demand signal in the commercial businesses, which should lead to improving revenue and EPS growth in 2H23,” Morgan Stanley analyst Keith Weiss wrote in a note on Tuesday.

As a result, the valuation of the tech giant is too cheap to ignore, Weiss contended.

“Trading at ~20x CY24 GAAP earnings, accelerating EPS growth should bring investors back to the name,” Weiss added.

Here are more details on Morgan Stanley’s defense of Microsoft stock:

Rating: Overweight (reiteration)

Price Target: $307 (raised from $296)

Fiscal Year 2023 EPS Estimate: $9.51 (consensus: $9.55)

Weiss acknowledged investors have valid concerns about the near-term path of Microsoft’s growth based on current economic conditions.

“Near-term investor concerns around Microsoft typically fall into two categories,” Weiss said,…

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