Microsoft’s transformation towards becoming an increasingly cloud-based IT company can come to see the company’s shares rise by 50 percent over the next three years, writes the business magazine Barron’s.
Microsoft, which is scheduled to launch its new operating system Windows 10 on July 29, is currently trading 16 times its free cash flow. This represents a discount to the S & amp; P companies where the average is more than 20. An increase to 18 times free cash flow would result in a share price of $ 55, according to Barron’s. Microsoft is currently trading around the $ 45 level.
The rise of shares may, however, take time. The background is the company’s transition to cloud subscriptions, which in the short term teaches result in lower earnings outcome. Microsoft has previously used prepaid license payments as earnings method.
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