Analysts raise price targets on Microsoft

PC shipment stabilization is the single biggest positive driver for Microsoft's business with heavy consumer exposure, analyst Sandeep Aggarwal at Collins Stewart said.

Robert Breza of RBC Capital Markets said Microsoft remains well positioned for a potential rebound, with Windows 7 heading a strong product cycle. "It remains one of our favorite large cap software names."

Windows outperformed by about $200 million and benefited from a channel inventory build, after this same factor had a net negative effect in each of the last three quarters, analyst John DiFucci at J.P. Morgan Securities said.

"We believe this business could benefit from further inventory build associated with the launch of Windows 7," DiFucci said.

Jefferies analyst Katherine Egbert said management did a good job controlling costs through this recession, and a culture of thrift is now setting in as the new norm at Microsoft.

The company posted a first-quarter profit of 40 cents compared with analysts calling for a profit of 32 cents a share, according to Thomson Reuters I/B/E/S. Shares of the company were trading up 2 percent at $28.69 Monday morning on Nasdaq.

Below is a list of price target changes:

Brokerage Price Targets ($)

New Old

Collins Stewart 35 29

Morgan Stanley 33 30

RBC 33 30

Jefferies 32 30

Barclays 31 20

JP Morgan 30 20

(Reporting by Mansi Dutta in Bangalore; Editing by Ratul Ray Chaudhuri)