UPDATE: Deutsche Bank Upgrades Microsoft, Comments on "Cheap" Shares

In a report published Wednesday, Deutsche Bank analyst Nandan Amladi transferred coverage to Karl Keirstead who upgraded the rating for Microsoft (NASDAQ: MSFT) from Hold to Buy and raised the price target from $32.00 to $40.00.

Keirstead noted that despite the worst y/y declines for PC unit shipments, Microsoft's stock appreciated approximately 40% in 2013. Deutsche Bank reported that they are seeing signs of PCs stabilizing and appreciate the potential for a new CEO to cut operating expense. Both factors could drive an upside and aid in the company's growth. In addition, the analyst wrote that Microsoft is on track with their moves to pivot cloud computing, particularly with Office 365 and Azure. With all of these considerations, Keirstead observed that shares of Microsoft look cheap.

Deutsche Bank commented, “Street sentiment about the overall PC market is already as negative as it's likely to be and in fact the PC market is showing early signs of life (or at least stability). Microsoft is, in our view, still not getting enough credit for its large and stable enterprise software business, which we believe is well-positioned as overall IT spending improves and the spending mix shifts to cheaper solutions.”

Shares of Microsoft closed at $35.93 on Wednesday.