Microsoft CEO Satya Nadella has earned high marks for his first four months at the helm of the software giant. His performance garnered the company’s stock an upgrade Thursday from research firm FBR Capital Markets.

FBR analyst Daniel Ives raised his rating on Microsoft (NASDAQ:MSFT) stock to outperform from market perform and hiked his price target to 49 from 43.

Microsoft stock was up 1.5% near 41 in afternoon trading on the stock market today.

“We have a high degree of confidence in Satya Nadella’s plan for Microsoft’s future,” Ives wrote. “With Nadella at the helm, Microsoft is off to a golden start with his improved transparency and strategic focus on the mobile/cloud space,” Ives wrote.

Based on the company’s March quarter results and FBR checks with customers, Microsoft is experiencing accelerated traction in cloud computing with its core cloud Office product (Office 365) showing good subscriber momentum, he said. Meanwhile, Microsoft’s cloud platform Azure is “growing rapidly on the heels of strong secular trends” favoring cloud offerings.

Since replacing Steve Ballmer as CEO on Feb. 4, Nadella has made a number of moves in his “mobile first, cloud first” strategy. He is working to transform Microsoft from a PC-centric company to one focused on mobile devices and cloud computing. His actions have included making Office available for Apple‘s (NASDAQ:AAPL) iPad tablet and cutting prices for online storage and cloud-computing services to better compete with Amazon.com (NASDAQ:AMZN), Google (NASDAQ:GOOGL) and others. On May 29, Microsoft and Salesforce.com (NYSE:CRM) announced a strategic partnership to link their products.

Ives said his major concerns with Microsoft are how it manages the recent acquisition of Nokia‘s (NYSE:NOK) handset business and its efforts to get traction for its Surface tablets.

“In a nutshell, while its mobile strategy (e.g., Surface, Nokia) remains a ‘prove me’ situation, we believe Microsoft’s intertwined focus with the cloud will help breathe new life into this software behemoth over the coming years,” he wrote. “The ‘Nadella era’ at Microsoft appears to be off to a good start, as the software veteran is showing openness in his strategy/vision while veering away from the status quo, representing a breath of fresh air for investors.”