Wells Fargo Upgrades Microsoft, Says Mobility & Cloud Services Are Critical

Wells Fargo on Monday issued a report on Microsoft Corporation (NASDAQ: MSFT) upgrading the company from Market Perform to Outperform and set a $50 price target.

Analysts Jason Maynard and Karen Russillo wrote, "We like the company's current focus on mobility and cloud, and think that there is room for multiple expansion as the company gets through its transition...In our view, management is making sound moves that should benefit the business in the intermediate and long term. We think the strategic position has improved with the new cloud/mobile product introductions, the "software anywhere" cross-platform approach, and disciplined cost controls...the 3 percent dividend yield provides a cushion at the $40 level."

Wells Fargo believes that Microsoft has embraced the notion of mobile software, making its products accessible anywhere, anytime. Thus the company decoupled its business model from being Windows-centric. While Windows 10 isn't expected to be a positive catalyst for Microsoft, the focus of the company towards the development of high quality applications and cloud services will provide a consistent Office annuity stream. This may increase Microsoft's bottom line.

Finally, Microsoft has reiterated that it is committed to returning capital to shareholders via share buybacks and a 3 percent dividend yield.

Shares of Microsoft closed Thursday at $40.29.