Goldman Sachs added Microsoft to its “Americas conviction buy list” Friday and raised its price target for the stock by $4 a share, sending shares of the technology bellwether higher in pre-market trading.
Goldman raised Microsoft’s price target to $29 per share from $25 per share and issued a “buy” rating on the stock. Microsoft shares closed at $23.50 Thursday, having slipped 0.8 percent.
But, shares of Microsoft jumped more than 2 percent in pre-market trading after the news from Goldman.
Goldman said Microsoft's revenue drivers, improved expense management and cash balances provided opportunities for the company to beat on its profit estimates.
"Looking out to calendar year 2010 and beyond, the new product pipeline, combined with a modest rebound in information technology spending, should buoy top-line growth," Goldman wrote in a note to clients.
The rating upgrade came as Microsoft announced it is prepared to invest up to 10 percent of its operating income in its Internet search business.
- Reuters contributed to this report.