Wells Fargo sees big upside in Microsoft
Jun. 2, 2020 7:18 AM ET|About: Microsoft Corporation (MSFT)|By Stephen Alpher, SA News Editor
Microsoft (NASDAQ: MSFT) should have a market cap north of $2T in two years (vs. about $1.4T today), says Wells Fargo, lifting its 12-month price target to a Street high $250, or 37% above last night's close.
How does the company get there? Wells sees Microsoft able to deliver low- to mid-teens revenue growth, led by 20% growth in Intelligent Cloud. That will be coupled with mid- to high-teens EPS and free cash flow growth driven by controlled costs and buybacks. Slap a 30x EV/FCF multiple on FCF estimates of $68.2B in FY2023 and MSFT's market cap would be over $2T.
That would mean a price of $283 per share. Discounting back to a 12-month target leads to $250.
Shares this morning are up 1.3% to $185.18.
Wells Fargo sees big upside in Microsoft
Jun. 2, 2020 7:18 AM ET|About: Microsoft Corporation (MSFT)|By Stephen Alpher, SA News Editor
Microsoft (NASDAQ: MSFT) should have a market cap north of $2T in two years (vs. about $1.4T today), says Wells Fargo, lifting its 12-month price target to a Street high $250, or 37% above last night's close.
How does the company get there? Wells sees Microsoft able to deliver low- to mid-teens revenue growth, led by 20% growth in Intelligent Cloud. That will be coupled with mid- to high-teens EPS and free cash flow growth driven by controlled costs and buybacks. Slap a 30x EV/FCF multiple on FCF estimates of $68.2B in FY2023 and MSFT's market cap would be over $2T.
That would mean a price of $283 per share. Discounting back to a 12-month target leads to $250.
Shares this morning are up 1.3% to $185.18.