Microsoft (MSFT) Given New Price Target at Barclays

Microsoft (MSFT) shares continue to see strong upside momentum take it to fresh record highs, recently printing the tape at a new 52-wkh of $41.59 and putting it on track to get up to $42 short-term.

The shares of the software giant are higher after Barclays’ (BCS) Raimo Lenschow, who believes the company has the capability of building its “Azure” cloud computing business into 10% of revenue by 2017, reiterated an ‘Overweight’ rating on MSFT, and a $44 price target, after M’soft’s announcement late yesterday that it will cut prices on compute by up to 35% and storage by up to 65% for its “Azure” cloud computing service platform.

However, while  the new price change will go into effect on May 1st — a month after Amazon (AMZN)’’s and Google (GOOG)’s pricing changes — Microsoft, writes Lenschow, should be focusing this week on innovation, not pricing:

[via Barron’s] “The company made this pricing announcement ahead of Build (Amazon’s developer conference in San Francisco) as it does not want pricing changes to grab the headlines at the conference”, he writes.” We believe this is wise as, while competitive pricing is clearly necessary to be one of the major players in the IaaS and PaaS markets, it is not what will ultimately differentiate Azure versus the competition. So far in the development of the public cloud market AWS has been viewed as the technology visionary, leading the way with the introduction of new cloud services. With Azure now reaching a decent scale, its IaaS offering maturing, and Nadella firmly prioritizing leadership in cloud services we believe Microsoft can start to push back on AWS and position itself as an innovator in the market. We could start to see the first signs of this at Build this week, so we would be on the lookout for the introduction of new Azure services.”

Shares of  Redmond, Wa.-based Microsoft advanced to $41.42 at the close yesterday in New York and have risen nearly 11% year-to-date.

MSFT has an average 3-month trading volume of 39.4 million shares. The ticker has a 52-wk range of $28.11 – $41.59. The company has a current market cap of $343.82 billion and a P/E ratio of 15.4.

emphasis added