BofA Securities analyst Brad Sills maintains Microsoft Corporation (NASDAQ:MSFT) with a Buy and raises the price target from $480 to $510.

Microsoft will publish the fiscal year 2024 fourth-quarter financial results after the close of the market on Tuesday, July 30, 2024.

Sills sees 1% upside to the fourth quarter revenue estimate of $64.0 billion, stemming from sustained Azure strength, Office E3/E5 premium mix, early Microsoft Copilot traction and a normalizing PC/Windows buying environment.

In addition, the analyst projects a neutral currency impact on growth, consistent with guidance.

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In addition, Sills sees a $100 million upside to the PBP segment revenue estimate for $20 billion (+9% y/y) from a modest Commercial Office upside on a conservative outlook for 14% growth.

The analyst writes that office upside is likely to come from ASP growth (6% y/y, consistent with third-quarter), given partner commentary on sustained strength in the premium E5 cycle and early traction with Copilot upsell deals.

In an upside case, the Office business could be on track to achieve 20% growth by the first quarter of FY26.

Overall, the analyst forecasts a reiterated outlook for double-digit revenue growth and margin to be down 100bps on ramping capex, driving the cost of sales higher.

Price Action: MSFT shares are trading lower by 1.5% to $442.77 at last check Wednesday.

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