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Microsoft 'Buy' Rating Intact Despite Floods: Analyst

Although Microsoft warned last week that floods in Thailandcould disrupt personal computer shipments, investors are more concerned with the tech company’s defensive characteristics, said Ed Maguire, a managing director at CLSA.

Maguire has a $32 price target for Microsoft stock and a "buy" rating, which he has held on the company’s shares since July 2010.

He added that CLSA analysts in Asia are beginning to see a rebound in production already. If PC shipments pick up faster than forecast, that could turn into a near-term positive for the company’s stock.

“I think what investors have been really focused on for Microsoft is that this is a stock that has defensive characteristics,” Maguire said. “It’s got an almost 2.8 percent dividend yield. It’s not as exposed to heavily back-end-loaded enterprise deals, and it’s also a product story this year with Windows 8, Windows Phone, Nokia [deal with Microsoft] starting to hit the market and a lot of momentum out of the Xbox platform.”

Maguire said attendees at last week’s Consumer Electronics Show were buzzing that Microsoft has started paying more attention to product design than it had in the past. He added that Windows 8, Windows Phone and Xbox have been drawing positive user reviews for their look and feel.

“I think there is a lot of anticipation both in the PC chain but more broadly in the consumer space, that Microsoft has a real chance of emerging as a solid number two after Apple, because of the fragmentation around Android where we have seen the Samsung Galaxy and the Amazon Fire be successful,” Maguire said.

Additional News: Plodding PC Sales Weigh Down Microsoft Profit

Additional Views: Despite Weak PC Sales, Microsoft Is a Buy

Disclosures:

Ed Maguire does not own any Microsoft stock. CLSA does not have any investment banking conflicts.

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