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A better entry point for Microsoft awaits

MARKETWATCH 10:12 AM ET 09/17/14

Symbol Last Price Change
MSFT 46.585 -0.175 (-0.37%)
MS 35.37down +0.26 (+0.74%)
KRFT 57.82down -0.53 (-0.91%)
QUOTES AS OF 10:35:27 AM ET 09/17/2014

NEW YORK (MarketWatch) -- Microsoft Corp.(MSFT) is looking like the attractive new kid at school. Its shares are up 42% over the past 12 months, sharply beating the S&P 500, and it just bought a hip new gaming company and raised its dividend 11% .

But hold off on the urge to buy these shares right away, analysts at Morgan Stanley(MS) warned this week, as there may be a slight correction in sight and a better entry point into this veteran tech stock.

"While this return profile looks attractive, MSFT now trades at a 13% premium to the S&P and we'd await better entry points before getting more aggressive," Morgan Stanley(MS) analyst Keith Weiss said in a note to clients, issued late Tuesday.

Morgan Stanley (MS), which reiterated an equal weight rating on the stock, points to Microsoft's(MSFT) 11% dividend increase, which is below the 22% raise seen last year and short of analyst expectations. However, it says a refreshed board, including the appointment of current Kraft Foods(KRFT) finance head Teri List-Stoll and Visa (V) CEO Charles Scharf, may add new perspective to the strategy devised by CEO Satya Nadella.

If entered in at a lower point later this year, investors may be poised to double their market returns on Microsoft(MSFT) over the next few years, Money Morning defense and tech specialist Michael Robinson said this week.

These gains are not just a reflection of the Minecraft buy, he said, but also of the company's direction under Nadella, who took over from Steve Ballmer in February.

Shares of Microsoft(MSFT) were off 0.12% to $46.64 in recent trade.

-Jennifer Booton; 415-439-6400; [e-mail]

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(END) Dow Jones Newswires
09-17-141012ET
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