Microsoft price target lowered to $520 from $640 at Stifel

Stifel analyst Brad Reback lowered the firm’s price target on Microsoft (MSFT) to $520 from $640 and keeps a Buy rating on the shares ahead of the company’s upcoming earnings report. The firm expects Microsoft to post about 200 basis points of Azure upside, or 39% constant currency growth, inline with buyside expectations, the analyst tells investors in a preview. While fiscal Q3 represents a more difficult year-over-year Azure comp, the firm believes Microsoft can post a similar level of incremental sequential adds as Q3 of FY25, resulting in about 38% year-over-year CC growth guidance given sizable recent datacenter capacity expansions, the analyst added. However, the firm believes the company must get to a point where Azure growth meaningfully outpaces capex growth rates for the stock to effectively re-rate in coming quarters.