Goldman Sachs Raises Microsoft Ahead Of Earnings (MSFT, INTC)

We already noted some changes out of Goldman Sachs in the beverage sector this morning, but there is a more decisive call today on Microsoft (NASDAQ: MSFT), and that is after a recent estimate raise on Microsoft and Apple Inc. (NASDAQ:AAPL) estimates.. 

• Goldman Sachs is raising Microsoft to the Americas Conviction Buy List ahead of its earnings announcement. 

Despite the problems seen with Intel (NASDAQ: INTC) this week, Goldman Sachs notes that Microsoft is actually a defensive play in a tough macro economy. What is perhaps most interesting about this call in particular is that if you go back to October earnings out of Microsoft you will see that Goldman Sachs raised Microsoft to the Conviction Buy List right before earnings then.  We noted that analyst Sarah Friar must have known something, and the stock saw some upside after earnings. 

This is based on its ongoing momentum of its product cycle and its currency benefits.  Its strength in small and mid-sized business is also noted.  Interestingly enough, Goldman Sachs noted a boost from "stronger than expected PC unit growth" should generate some upside to the most lucrative PC software sales in 2008.  The note says there is 20% upside for it to reach their $40.00 target. Goldman Sachs has its fiscal 2008 (June) target at $1.82 EPS and fiscal 2009 (June) at $2.02 EPS.

• EU won’t leave them alone…
• Office holding up well to Google Docs…
• Mac going after Vista…

Microsoft shares are trading up 1.1% in pre-market trading at $33.60.

Jon C. Ogg
January 17, 2008