Market Overview

Most Of Microsoft's Cloud Business Is 'Essential,' Even In a Recession, Says Bullish Wedbush

Share:
Most Of Microsoft's Cloud Business Is 'Essential,' Even In a Recession, Says Bullish Wedbush

Microsoft Corporation (NASDAQ: MSFT) beat analyst estimates for third-quarter earnings on Wednesday, and a bullish Wedbush analyst said much of the company's business benefits from the pandemic environment. 

The Microsoft Analyst

Wedbush analyst Daniel Ives maintained an Outperform on Microsoft with a $210 price target. 

The Microsoft Thesis 

Cloud strength was the "key theme" in Microsoft's earnings report, Ives said in a Wednesday note. (See his track record here.) 

Only about one-third of Microsoft's revenue, from PCs and supply chain, is exposed to the coronavirus pandemic, the analyst said. The rest, especially from cloud computing platform Azure and Office 365, benefits from the COVID-19 environment as more enterprises look for remote work options, he said. 

The vast majority of Microsoft's revenue and 80% to 90% of the company's valuation is based on Azure, Office 365 and core enterprise driven franchise, he said. 

"We have seen relatively strong cloud deal activity around Azure in the field and these numbers justify the bullishness the Street has shared over the past month on shares of MSFT." 

About 90% of the Microsoft cloud business can be deemed "essential" for enterprises, even if there's one or two quarters of a deep recessionary environment, Ives said. 

Wedbush values the company's cloud franchise at between $900 billion and $1 trillion, and said it remains bullish on the stock over the next 12-18 months.

MSFT Price Action

Microsoft shares were up 0.76% at $178.78 at the time of publication Thursday. 

Latest Ratings for MSFT

DateFirmActionFromTo
Jun 2020Goldman SachsMaintainsBuy
Jun 2020Argus ResearchMaintainsBuy
May 2020RBC CapitalReiteratesOutperform

View More Analyst Ratings for MSFT
View the Latest Analyst Ratings

 

Related Articles (MSFT)

View Comments and Join the Discussion!

Posted-In: Daniel IvesAnalyst Color Earnings News Price Target Reiteration Analyst Ratings Tech

Latest Ratings

StockFirmActionPT
BKHMizuhoMaintains70.0
JOBAlliance Global PartnersUpgrades2.5
RARECanaccord GenuityMaintains91.0
TTDOppenheimerMaintains450.0
PYPLWedbushMaintains200.0
View the Latest Analytics Ratings
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Premarket Activity
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Fintech Focus
A daily collection of all things fintech, interesting developments and market updates.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at vipaccounts@benzinga.com